[Fiscal 2025 Third Quarter Results Overview](index=1&type=section&id=Fiscal%202025%20Third%20Quarter%20Results%20Overview) This chapter provides a comprehensive overview of IES Holdings' financial performance for Q3 fiscal 2025, highlighting key results, segment-specific contributions, strategic initiatives, and capital allocation activities [Highlights and Recent Developments](index=1&type=section&id=Highlights%20and%20Recent%20Developments) IES Holdings reported strong Q3 fiscal 2025 performance with significant revenue and operating income growth, driven by data center demand across multiple segments, alongside strategic investments and acquisitions [Overview of Results](index=1&type=section&id=Overview%20of%20Results) IES Holdings achieved strong Q3 fiscal 2025 results, with double-digit growth in revenue, operating income, net income, and diluted EPS, primarily driven by robust demand - IES Holdings delivered strong performance in Q3 fiscal 2025, with a **16% increase in revenue** and a **24% increase in operating income**, driven by robust demand, particularly in the data center market[5](index=5&type=chunk) Q3 Fiscal 2025 Financial Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------------------------------------------ | :------------- | :------------- | :--------- | | Revenue | $890 million | $768 million | +16% | | Operating income | $111.9 million | $90.2 million | +24% | | Net income attributable to IES | $77.2 million | $62.1 million | +24% | | Diluted EPS attributable to common stockholders | $3.81 | $2.67 | +42.7% | | Adjusted net income attributable to IES | $79.8 million | $63.2 million | +26% | | Diluted adjusted EPS attributable to common stockholders | $3.95 | $2.72 | +45.2% | - Remaining performance obligations stood at approximately **$1.3 billion**, and backlog (non-GAAP) was approximately **$2.1 billion** as of June 30, 2025[6](index=6&type=chunk) - Subsequent to quarter end, the Communications segment acquired Qypsys, a Tampa-based provider of wireless network infrastructure[6](index=6&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) This section details the individual financial performance of IES Holdings' Communications, Residential, Infrastructure Solutions, and Commercial & Industrial segments for Q3 fiscal 2025 [Communications Segment](index=2&type=section&id=Communications%20Segment) The Communications segment experienced significant revenue and operating income growth in Q3 fiscal 2025, driven by strong demand in data center and high-tech manufacturing markets Communications Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $299.2 million | $192.3 million | +56% | | Operating income | $47.8 million | $21.0 million | +127.6% | - Growth was driven by strong demand across the business, particularly in the data center market, high-tech manufacturing, and distribution center end markets, coupled with successful project execution and improved margins[7](index=7&type=chunk) [Residential Segment](index=2&type=section&id=Residential%20Segment) The Residential segment faced an 8% revenue decline and a 23.5% operating income decrease in Q3 fiscal 2025 due to a challenging housing market Residential Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $346.1 million | $377.5 million | -8% | | Operating income | $33.4 million | $43.7 million | -23.5% | - The segment faced a challenging housing market due to concerns over affordability, insurance availability, unemployment, and economic uncertainty, leading to reduced revenue and operating margins[7](index=7&type=chunk)[8](index=8&type=chunk) - Decreased demand was partially mitigated by expansion of plumbing and HVAC trades in new markets[7](index=7&type=chunk) [Infrastructure Solutions Segment](index=2&type=section&id=Infrastructure%20Solutions%20Segment) The Infrastructure Solutions segment achieved substantial revenue and operating income growth in Q3 fiscal 2025, primarily from data center demand and operational efficiencies Infrastructure Solutions Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $129.5 million | $102.0 million | +27% | | Operating income | $32.6 million | $19.8 million | +64.6% | - Growth was driven by strong demand in custom engineered solutions, primarily in the data center end market, and expansion of field services offerings. Profit improvement resulted from higher volumes, improved pricing, operating efficiencies, and capacity investments[9](index=9&type=chunk) [Commercial & Industrial Segment](index=2&type=section&id=Commercial%20%26%20Industrial%20Segment) The Commercial & Industrial segment reported a 20% revenue increase in Q3 fiscal 2025, driven by education, healthcare, and data center markets, despite a slight operating income decrease Commercial & Industrial Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $115.4 million | $96.6 million | +20% | | Operating income | $12.9 million | $13.0 million | -0.8% | - Increased activity in the education and healthcare end markets, expansion in the Midwest, and continued solid demand and strong execution in the data center end market contributed to revenue growth[11](index=11&type=chunk) [Strategic Initiatives and Acquisitions](index=3&type=section&id=Strategic%20Initiatives%20and%20Acquisitions) IES is strategically expanding capacity for data center projects, investing in IT upgrades, and pursuing acquisitions to enhance its custom engineered solutions and wireless network infrastructure capabilities - IES is focusing on growth by expanding capacity for large data center projects in its Communications, Infrastructure Solutions, and Commercial & Industrial segments, and investing in IT upgrades for the Residential segment[12](index=12&type=chunk) - The company entered an agreement to purchase an industrial fabrication operation in Manitowoc, Wisconsin, to expand custom engineered solutions capacity[12](index=12&type=chunk) - Subsequent to quarter end, IES acquired the remaining **20% interest** in Edmonson Electric and the Communications segment completed the acquisition of Qypsys, a wireless network infrastructure provider[13](index=13&type=chunk) [Capital Allocation and Stock Buyback Plan](index=3&type=section&id=Capital%20Allocation%20and%20Stock%20Buyback%20Plan) Capital allocation remains a priority for IES, with significant cash reserves, capital expenditures, and investments in marketable securities, alongside a stock repurchase program - Capital allocation remains a top priority, with the company ending the quarter with **$88.4 million** of cash and restricted cash, net of debt, and **$66.8 million** of marketable securities[14](index=14&type=chunk) - Capital allocation highlights include **$17.1 million** in capital expenditures, a **$7 million** deposit for the Manitowoc fabrication operation, repurchasing **33,900 shares** for **$5.3 million**, and using **$32.8 million** to purchase marketable securities[15](index=15&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This chapter clarifies the definition and purpose of IES Holdings' non-GAAP financial measures, including adjusted net income, adjusted diluted EPS, and backlog, and their reconciliation to GAAP [Definition and Purpose](index=3&type=section&id=Definition%20and%20Purpose) IES Holdings uses non-GAAP measures like adjusted net income and adjusted EBITDA to provide additional insights by distinguishing nonrecurring or noncash items, aiding in trend identification and peer comparisons - Non-GAAP measures like adjusted net income, adjusted diluted EPS, and adjusted EBITDA are used to distinguish nonrecurring events (e.g., litigation settlements, leadership change expenses, gains/losses from business sales) or noncash events (e.g., impairment charges, unrealized gains/losses on investments)[16](index=16&type=chunk) - These measures, when reconciled to GAAP, help investors identify underlying trends, compare financial performance across periods and peers, and should not be considered in isolation from or as a substitute for GAAP financial information[16](index=16&type=chunk) [Remaining Performance Obligations and Backlog](index=4&type=section&id=Remaining%20Performance%20Obligations%20and%20Backlog) Remaining performance obligations (RPO) represent unrecognized GAAP revenue, while backlog, a non-GAAP measure, expands on RPO by including non-enforceable agreements to provide a broader view of future revenue potential - Remaining performance obligations are a GAAP measure representing the unrecognized revenue value of contract commitments[17](index=17&type=chunk) - Backlog is a non-GAAP measure common in IES's industry, which includes remaining performance obligations plus signed agreements and letters of intent that are not legally enforceable prior to work starting[17](index=17&type=chunk) - Management believes backlog enables more effective forecasting of future results and identification of future operating trends, but its methodology may not be comparable to other companies[17](index=17&type=chunk) [About IES Holdings, Inc.](index=4&type=section&id=About%20IES%20Holdings%2C%20Inc.) This chapter provides an overview of IES Holdings, Inc., detailing its core business of designing and installing electrical and technology systems and providing infrastructure products across diverse markets [Company Profile](index=4&type=section&id=Company%20Profile) IES Holdings, Inc. designs and installs integrated electrical and technology systems and provides infrastructure products and services to various end markets across the United States - IES designs and installs integrated electrical and technology systems and provides infrastructure products and services[19](index=19&type=chunk) - The company serves various end markets, including data centers, residential housing, and commercial and industrial facilities, with over **9,000 employees** in the United States[19](index=19&type=chunk) [Contact Information](index=5&type=section&id=Contact%20Information) This chapter provides essential contact details for IES Holdings' Chief Financial Officer and its Investor Relations group for company and investor inquiries [Company and Investor Relations Contacts](index=5&type=section&id=Company%20and%20Investor%20Relations%20Contacts) This section provides contact details for IES Holdings' Chief Financial Officer and its Investor Relations group, Alpha IR Group, for company and investor inquiries - Company Contact: Tracy McLauchlin, Chief Financial Officer, IES Holdings, Inc. (713) 860-1500[21](index=21&type=chunk) - Investor Relations Contact: Robert Winters or Stephen Poe, Alpha IR Group, (312) 445-2870, IESC@alpha-ir.com[21](index=21&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This chapter serves as a disclaimer for forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially from projections [Disclaimer and Risk Factors](index=5&type=section&id=Disclaimer%20and%20Risk%20Factors) This section serves as a comprehensive disclaimer for forward-looking statements, highlighting that such statements are based on estimates and assumptions and involve significant risks and uncertainties - Statements in the release may be 'forward-looking statements' based on estimates and assumptions, identifiable by terms like 'may,' 'will,' 'expect,' 'plan,' 'intend,' 'believe,' etc[21](index=21&type=chunk) - These statements involve risks and uncertainties that could cause actual future outcomes to differ materially, including general economic conditions, competition, project execution, labor costs, supply chain disruptions, inaccurate estimates, reliance on third parties, integration challenges, and regulatory changes[21](index=21&type=chunk)[22](index=22&type=chunk) - The company undertakes no obligation to publicly update or revise any information or forward-looking statements after the date of the release, and these statements are provided pursuant to the safe harbor under the Private Securities Litigation Reform Act of 1995[22](index=22&type=chunk)[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This chapter presents the unaudited condensed consolidated financial statements for IES Holdings, Inc., including the statement of operations, balance sheets, and cash flows for specified periods [Condensed Consolidated Statement of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) This section presents the unaudited condensed consolidated statement of operations for IES Holdings, Inc. and its subsidiaries for the three and nine months ended June 30, 2025, and 2024, detailing revenues, gross profit, operating income, net income, and earnings per share Condensed Consolidated Statement of Operations (Millions of USD, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $890.2 | $768.4 | $2,473.7 | $2,108.6 | | Gross profit | $239.6 | $194.8 | $626.5 | $510.2 | | Operating income | $111.9 | $90.2 | $279.2 | $225.9 | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Diluted EPS attributable to common stockholders | $3.81 | $2.67 | $10.03 | $6.84 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets for IES Holdings, Inc. and its subsidiaries as of June 30, 2025, and September 30, 2024, outlining the company's assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Millions of USD) | Metric | June 30, 2025 | September 30, 2024 | | :------------------------- | :------------ | :----------------- | | Total current assets | $1,012.8 | $871.7 | | Total assets | $1,469.7 | $1,244.0 | | Total current liabilities | $546.6 | $522.6 | | Total liabilities | $647.3 | $591.9 | | Total stockholders' equity | $781.4 | $611.1 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for IES Holdings, Inc. and its subsidiaries for the nine months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Millions of USD) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $154.1 | $141.6 | | Net cash used in investing activities | $(114.1) | $(96.4) | | Net cash used in financing activities | $(32.4) | $(76.1) | | Net increase (decrease) in cash and cash equivalents | $7.6 | $(30.9) | | Cash and cash equivalents, end of period | $108.4 | $44.9 | [Operating Segment Statement of Operations](index=11&type=section&id=Operating%20Segment%20Statement%20of%20Operations) This chapter provides a detailed breakdown of revenues and operating income (loss) for each of IES Holdings' operating segments for the three and nine months ended June 30, 2025, and 2024 [Segment-wise Performance](index=11&type=section&id=Segment-wise%20Performance) This section provides a detailed breakdown of revenues and operating income (loss) for each of IES Holdings' operating segments—Communications, Residential, Infrastructure Solutions, and Commercial & Industrial—for the three and nine months ended June 30, 2025, and 2024, illustrating the individual contributions and performance of each business unit Operating Segment Performance (Millions of USD) | Segment | Q3 Fiscal 2025 Revenue | Q3 Fiscal 2024 Revenue | Q3 Fiscal 2025 Operating Income (Loss) | Q3 Fiscal 2024 Operating Income (Loss) | | :------------------------ | :--------------------- | :--------------------- | :----------------------------------- | :----------------------------------- | | Communications | $299.2 | $192.3 | $47.8 | $21.0 | | Residential | $346.1 | $377.5 | $33.4 | $43.7 | | Infrastructure Solutions | $129.5 | $102.0 | $32.6 | $19.8 | | Commercial & Industrial | $115.4 | $96.6 | $12.9 | $13.0 | | Corporate | - | - | $(14.8) | $(7.3) | | Total | $890.2 | $768.4 | $111.9 | $90.2 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) This chapter provides reconciliations of IES Holdings' non-GAAP financial measures, including adjusted net income, adjusted EBITDA, and backlog, to their most directly comparable GAAP measures [Adjusted Net Income and EPS Reconciliation](index=8&type=section&id=Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) This section provides a reconciliation of GAAP net income attributable to IES Holdings, Inc. to adjusted net income and adjusted earnings per share attributable to common stockholders, detailing adjustments for unrealized gains/losses on trading securities and their associated tax impacts for the three and nine months ended June 30, 2025, and 2024 Adjusted Net Income and EPS Reconciliation (Millions of USD, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Unrealized (gain) loss on trading securities | $3.7 | $1.5 | $(4.1) | $3.3 | | Adjusted net income attributable to IES Holdings, Inc. | $79.8 | $63.2 | $201.1 | $158.5 | | Adjusted diluted EPS attributable to common stockholders | $3.95 | $2.72 | $9.88 | $6.96 | [Adjusted EBITDA Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section reconciles GAAP net income attributable to IES Holdings, Inc. to EBITDA and Adjusted EBITDA for the three and nine months ended June 30, 2025, and 2024, by adding back provisions for income taxes, interest and other (income) expense, depreciation and amortization, and non-cash equity compensation expense Adjusted EBITDA Reconciliation (Millions of USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Provision for income taxes | $29.4 | $22.6 | $75.5 | $57.4 | | Interest & other (income) expense, net | $3.1 | $1.0 | $(5.9) | $1.5 | | Depreciation and amortization | $11.7 | $10.6 | $34.7 | $26.0 | | EBITDA | $121.4 | $96.3 | $308.5 | $240.9 | | Non-cash equity compensation expense | $4.3 | $1.4 | $9.4 | $4.3 | | Adjusted EBITDA | $125.7 | $97.7 | $317.9 | $245.2 | [Remaining Performance Obligations and Backlog Reconciliation](index=13&type=section&id=Remaining%20Performance%20Obligations%20and%20Backlog%20Reconciliation) This section provides a supplemental reconciliation of remaining performance obligations (a GAAP measure) to backlog (a non-GAAP measure) as of June 30, 2025, September 30, 2024, and June 30, 2024, by including agreements that do not yet have an enforceable obligation Remaining Performance Obligations and Backlog Reconciliation (Millions of USD) | Metric | June 30, 2025 | September 30, 2024 | June 30, 2024 | | :---------------------------------------- | :------------ | :----------------- | :------------ | | Remaining performance obligations | $1,295 | $1,176 | $1,177 | | Agreements without an enforceable obligation | $772 | $610 | $520 | | Backlog | $2,067 | $1,786 | $1,697 |

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) This section presents IES Holdings' comprehensive financial information, including financial statements, notes, and management's discussion [Definitions](index=4&type=section&id=DEFINITIONS) This section defines key terms used throughout the Quarterly Report on Form 10-Q, clarifying company references - The terms "**IES**", "**the Company**", "**the Registrant**", "**we**", "**our**", "**ours**" and "**us**" refer to IES Holdings, Inc. and its consolidated subsidiaries[12](index=12&type=chunk) [Disclosure Regarding Forward-Looking Statements](index=4&type=section&id=DISCLOSURE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements, emphasizing their reliance on estimates and assumptions, and lists associated risks - Forward-looking statements are based on estimates and assumptions, subject to **risks and uncertainties** that could cause actual results to differ materially[14](index=14&type=chunk)[16](index=16&type=chunk) - Key risks include reduced demand, economic conditions (supply chain, inflation, interest rates), competition, project execution, and acquisition integration[14](index=14&type=chunk) - Additional risks cover litigation, regulatory changes, cybersecurity threats, loss of key personnel, credit markets, tax impacts, and controlling shareholder influence[17](index=17&type=chunk) [Item 1. Financial Statements](index=5&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for IES Holdings, Inc. and its subsidiaries, including the balance sheets, statements of comprehensive income, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining business operations, accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20September%2030%2C%202024) The balance sheets show IES Holdings' financial position, with significant increases in total assets, current assets, and total stockholders' equity | Metric | June 30, 2025 (Thousands) | September 30, 2024 (Thousands) | Change (Thousands) | % Change | | :----------------------------------- | :-------------------------- | :----------------------------- | :----------------- | :------- | | Total Assets | $1,469,722 | $1,244,026 | $225,696 | 18.14% | | Total Current Assets | $1,012,854 | $871,694 | $141,160 | 16.19% | | Cash and cash equivalents | $101,445 | $100,832 | $613 | 0.61% | | Marketable securities | $66,815 | $35,003 | $31,812 | 90.88% | | Accounts receivable, net | $535,541 | $469,833 | $65,708 | 14.00% | | Total Liabilities | $647,304 | $591,917 | $55,387 | 9.36% | | Total Stockholders' Equity | $781,441 | $611,113 | $170,328 | 27.87% | [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) The statements show strong revenue and net income growth for both periods ended June 30, 2025, driven by increased gross and operating income Three Months Ended June 30, 2025 vs 2024 | Metric (Thousands) | 2025 | 2024 | Change | % Change | | :----------------- | :---------- | :---------- | :---------- | :------- | | Revenues | $890,158 | $768,415 | $121,743 | 15.84% | | Gross profit | $239,597 | $194,781 | $44,816 | 23.01% | | Operating income | $111,902 | $90,176 | $21,726 | 24.09% | | Net income | $79,287 | $66,639 | $12,648 | 18.98% | | Basic EPS | $3.86 | $2.71 | $1.15 | 42.44% | | Diluted EPS | $3.81 | $2.67 | $1.14 | 42.69% | Nine Months Ended June 30, 2025 vs 2024 | Metric (Thousands) | 2025 | 2024 | Change | % Change | | :----------------- | :------------ | :------------ | :------------ | :------- | | Revenues | $2,473,665 | $2,108,592 | $365,073 | 17.31% | | Gross profit | $626,493 | $510,198 | $116,295 | 22.80% | | Operating income | $279,216 | $225,880 | $53,336 | 23.61% | | Net income | $209,560 | $167,027 | $42,533 | 25.46% | | Basic EPS | $10.16 | $6.92 | $3.24 | 46.82% | | Diluted EPS | $10.03 | $6.84 | $3.19 | 46.64% | [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) Stockholders' equity increased for both periods ended June 30, 2025, primarily due to net income, partially offset by treasury stock acquisitions Stockholders' Equity Changes (Thousands) | Metric | 3 Months Ended June 30, 2025 | 9 Months Ended June 30, 2025 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Balance, beginning of period | $705,783 | $611,113 | | Net income attributable to IES Holdings | $77,230 | $204,185 | | Acquisition of treasury stock | $(5,328) | $(41,593) | | Non-cash compensation | $4,316 | $9,354 | | Balance, end of period | $781,441 | $781,441 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Nine%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net cash from operating activities increased for the nine months ended June 30, 2025, with changes in investing and financing activities Cash Flow Summary (Nine Months Ended June 30, Thousands) | Activity | 2025 | 2024 | Change | | :---------------------------- | :------------ | :------------ | :------------ | | Net cash from operating | $154,095 | $141,621 | $12,474 | | Net cash used in investing | $(114,099) | $(96,397) | $(17,702) | | Net cash used in financing | $(32,380) | $(76,097) | $43,717 | | Increase (decrease) in cash | $7,616 | $(30,873) | $38,489 | | Cash, beginning of period | $100,832 | $75,770 | $25,062 | | Cash, end of period | $108,448 | $44,897 | $63,551 | - Investing activities for the nine months ended June 30, 2025, included **$44.9 million** for equity investments (Jett Texas Company LLC), **$47.3 million** for property and equipment, and **$22.6 million** for business combinations (Arrow Engine Company)[30](index=30&type=chunk) - Financing activities for the nine months ended June 30, 2025, included **$41.6 million** for treasury stock repurchases and **$7.5 million** in distributions to noncontrolling interests[30](index=30&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes explain the company's business, accounting policies, and specific financial items, including revenue, debt, and segment reporting [1. Business and Accounting Policies](index=13&type=section&id=1%2E%20BUSINESS%20AND%20ACCOUNTING%20POLICIES) This section describes IES Holdings' business segments and details its accounting policies, including seasonality and recent standard adoptions - IES Holdings, Inc. operates in **four segments**: Communications (technology infrastructure for data centers), Residential (electrical, HVAC, plumbing for housing), Infrastructure Solutions (electro-mechanical solutions for industrial operations), and Commercial & Industrial (electrical and mechanical services)[32](index=32&type=chunk)[36](index=36&type=chunk) - The Residential segment experiences **seasonality** with higher revenues in spring/summer, while other segments are less seasonal but can be affected by project timing and economic conditions[33](index=33&type=chunk) - The company adopted ASU 2021-08 (Business Combinations) on October 1, 2023, impacting how acquired contract assets and liabilities are recognized; new standards are being evaluated for future disclosure impacts[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [2. Controlling Stockholder](index=16&type=section&id=2%2E%20CONTROLLING%20STOCKHOLDER) Tontine Associates, L.L.C. is the controlling stockholder, owning approximately **55%** of common stock, granting significant control over company affairs - Tontine Associates, L.L.C. and its affiliates (Tontine) own approximately **55%** of IES Holdings, Inc.'s outstanding common stock, giving them significant control[48](index=48&type=chunk) - A shelf registration statement allows Tontine to resell its shares, and a significant disposition could trigger **change of control provisions** in credit agreements, bonding agreements, and executive severance plans[49](index=49&type=chunk)[50](index=50&type=chunk) - Jeffrey L. Gendell, managing member and founder of Tontine, transitioned from CEO to **Executive Chairman** effective July 1, 2025, and also serves as Chairman of the Board[51](index=51&type=chunk) [3. Revenue Recognition](index=18&type=section&id=3%2E%20REVENUE%20RECOGNITION) IES Holdings recognizes revenue primarily over time using the percentage of completion method, with variable consideration estimated and disaggregated by segment - Revenue is primarily recognized **over time** using the percentage of completion method, based on costs incurred, for most services where control transfers continuously to the customer[59](index=59&type=chunk)[60](index=60&type=chunk) - Variable consideration, including change orders and incentives, is estimated and included in the transaction price if a **significant revenue reversal is not probable**[61](index=61&type=chunk) Disaggregated Revenue by Segment (Thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Communications | $299,213 | $192,303 | $805,189 | $556,554 | | Residential | $346,038 | $377,536 | $983,975 | $1,032,764 | | Infrastructure Solutions| $129,488 | $102,022 | $355,233 | $240,699 | | Commercial & Industrial | $115,419 | $96,554 | $329,268 | $278,575 | | Total Revenue | $890,158 | $768,415 | $2,473,665 | $2,108,592 | [4. Debt](index=21&type=section&id=4%2E%20DEBT) IES Holdings amended its credit agreement, increasing its revolving credit facility to **$300 million** and extending maturity to January 21, 2030 - The revolving credit facility increased from **$150 million to $300 million**, with maturity extended to January 21, 2030[69](index=69&type=chunk) - As of June 30, 2025, the company had **$20 million** in borrowings and **$5.5 million** in outstanding letters of credit, resulting in **$274.5 million** total availability under the revolving credit facility[71](index=71&type=chunk) - The company was in compliance with financial covenants, including a maximum Consolidated Total Leverage Ratio of **3.00 to 1.00** and a minimum Consolidated Interest Coverage Ratio of **3.00 to 1.00**[70](index=70&type=chunk) [5. Per Share Information](index=22&type=section&id=5%2E%20PER%20SHARE%20INFORMATION) This section reconciles basic and diluted EPS, showing significant increases for both the three and nine months ended June 30, 2025 Earnings Per Share (EPS) Attributable to Common Stockholders | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic | $3.86 | $2.71 | $10.16 | $6.92 | | Diluted| $3.81 | $2.67 | $10.03 | $6.84 | - Basic EPS increased by **42.44%** for the three months and **46.82%** for the nine months ended June 30, 2025, compared to the prior year[74](index=74&type=chunk) - Diluted EPS increased by **42.69%** for the three months and **46.64%** for the nine months ended June 30, 2025, compared to the prior year[74](index=74&type=chunk) [6. Operating Segments](index=22&type=section&id=6%2E%20OPERATING%20SEGMENTS) IES Holdings manages its business through four operating segments, with detailed financial results provided for each segment - The company's **four operating segments** are Communications, Residential, Infrastructure Solutions, and Commercial & Industrial, with performance reviewed by the CEO[75](index=75&type=chunk) Segment Revenues (Thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Communications | $299,213 | $192,303 | $805,189 | $556,554 | | Residential | $346,038 | $377,536 | $983,975 | $1,032,764 | | Infrastructure Solutions| $129,488 | $102,022 | $355,233 | $240,699 | | Commercial & Industrial | $115,419 | $96,554 | $329,268 | $278,575 | | Total Revenues | $890,158 | $768,415 | $2,473,665 | $2,108,592 | Segment Operating Income (Loss) (Thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Communications | $47,722 | $21,004 | $115,956 | $64,345 | | Residential | $33,376 | $43,720 | $79,876 | $102,507 | | Infrastructure Solutions| $32,672 | $19,730 | $82,442 | $46,754 | | Commercial & Industrial | $12,949 | $13,029 | $35,857 | $31,698 | | Corporate | $(14,817) | $(7,307) | $(34,915) | $(19,424) | | Total Operating Income | $111,902 | $90,176 | $279,216 | $225,880 | [7. Stockholders' Equity](index=24&type=section&id=7%2E%20STOCKHOLDERS%27%20EQUITY) This section details changes in stockholders' equity, including the Equity Incentive Plan amendment and the ongoing stock repurchase program - The Equity Incentive Plan was amended to authorize an additional **750,000 shares**, extending its term to February 19, 2035, with approximately **1.27 million shares** available for issuance as of June 30, 2025[79](index=79&type=chunk) - A stock repurchase program authorized up to **$200 million** of common stock purchases, with **173,262 shares** repurchased for **$41.6 million** during the nine months ended June 30, 2025, at an average price of **$174.25** per share[80](index=80&type=chunk)[177](index=177&type=chunk) Stock-Based Compensation Expense (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Director PSUs | $173 | $134 | $492 | $364 | | Employee PSUs | $4,157 | $1,274 | $8,924 | $3,969 | [8. Investments](index=25&type=section&id=8%2E%20INVESTMENTS) This section details the company's investments in marketable equity securities and an equity method investment in Jett Texas Company LLC Marketable Securities (Thousands) | Type of Security | June 30, 2025 | September 30, 2024 | | :----------------------- | :------------ | :----------------- | | Marketable equity securities | $66,815 | $31,639 | | Marketable debt securities | — | $3,364 | | Total marketable securities| $66,815 | $35,003 | Unrealized Gain (Loss) on Trading Securities (Thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Unrealized gain (loss) | $(3,764) | $(1,552) | $4,098 | $(3,342) | - On December 2, 2024, the company acquired a **12.5%** membership interest in Jett Texas Company LLC for **$44.9 million**, accounted for using the equity method[87](index=87&type=chunk) [9. Fair Value Measurements](index=26&type=section&id=9%2E%20FAIR%20VALUE%20MEASUREMENTS) This section outlines fair value measurement accounting for marketable securities, executive savings plan assets, and contingent consideration liabilities - Fair value is the price to sell an asset or transfer a liability between market participants, with a hierarchy for observable and unobservable inputs[88](index=88&type=chunk) - Marketable equity securities and executive savings plan assets/liabilities are measured at fair value using **Level 1 inputs** (quoted prices in active markets)[91](index=91&type=chunk) - Contingent consideration liabilities, such as for the Greiner Industries acquisition, are measured using **Level 3 inputs** (significant unobservable inputs), with a fair value of **$(4,484) thousand** at June 30, 2025[91](index=91&type=chunk)[93](index=93&type=chunk) [10. Inventory](index=27&type=section&id=10%2E%20INVENTORY) This section details inventory components, which increased from **$101.7 million** at September 30, 2024, to **$108.8 million** at June 30, 2025 Inventory Components (Thousands) | Component | June 30, 2025 | September 30, 2024 | | :-------------- | :------------ | :----------------- | | Raw materials | $26,446 | $14,078 | | Work in process | $13,016 | $12,494 | | Finished goods | $6,893 | $4,389 | | Parts and supplies| $62,420 | $70,767 | | Total inventories | $108,775 | $101,728 | - Total inventories increased by **$7.0 million**, or **6.9%**, from September 30, 2024, to June 30, 2025[94](index=94&type=chunk) [11. Goodwill and Intangible Assets](index=27&type=section&id=11%2E%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill increased by **$1.3 million** to **$95.3 million** due to the Arrow Engine Company acquisition, while net intangible assets decreased Goodwill by Segment (Thousands) | Segment | Goodwill at Sept 30, 2024 | Acquisitions | Goodwill at June 30, 2025 | | :---------------------- | :------------------------ | :----------- | :------------------------ | | Communications | $2,816 | — | $2,816 | | Residential | $51,370 | — | $51,370 | | Infrastructure Solutions| $39,774 | $1,335 | $41,109 | | Commercial & Industrial | — | — | — | | Total Goodwill | $93,960 | $1,335 | $95,295 | - Goodwill increased by **$1.3 million**, primarily from the acquisition of Arrow Engine Company on January 31, 2025[95](index=95&type=chunk) Intangible Assets, Net (Thousands) | Intangible Asset | June 30, 2025 | September 30, 2024 | | :------------------------ | :------------ | :----------------- | | Trademarks/trade names | $7,000 | $6,857 | | Technical library | $164 | $179 | | Customer relationships | $31,499 | $38,318 | | Backlog and construction contracts | $214 | $536 | | Total intangible assets, net | $38,877 | $45,890 | [12. Commitments and Contingencies](index=27&type=section&id=12%2E%20COMMITMENTS%20AND%20CONTINGENCIES) This section addresses legal matters, risk management, and surety obligations, with no material adverse effects expected from current proceedings - The company is party to various claims and lawsuits in the ordinary course of business, with reserves recorded when a liability is probable and estimable, expecting **no material adverse effect** on financial position, results of operations, or cash flows[97](index=97&type=chunk) - IES retains risk for workers' compensation, liability, and health claims, with **$11.4 million** accrued for self-insurance liabilities at June 30, 2025[99](index=99&type=chunk) - The estimated cost to complete bonded projects was approximately **$142.2 million** as of June 30, 2025, and the company believes its bonding capacity is adequate[101](index=101&type=chunk) [13. Supplemental Cash Flow Information](index=29&type=section&id=13%2E%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This section reconciles cash, cash equivalents, and restricted cash, and details supplemental cash and noncash activities, including right-of-use assets Cash, Cash Equivalents and Restricted Cash (Thousands) | Component | June 30, 2025 | September 30, 2024 | | :-------------------------------------- | :------------ | :----------------- | | Cash and cash equivalents | $101,445 | $100,832 | | Restricted cash | $7,003 | — | | Total cash, cash equivalents and restricted cash | $108,448 | $100,832 | Supplemental Cash and Noncash Activities (Nine Months Ended June 30, Thousands) | Activity | 2025 | 2024 | | :---------------------------------------------- | :-------- | :-------- | | Cash paid for interest | $564 | $405 | | Cash paid for income taxes, net | $94,078 | $57,790 | | Right-of-use assets for new operating lease liabilities | $35,328 | $12,691 | | Right-of-use assets for new finance lease liabilities | $663 | $1,268 | [14. Subsequent Events](index=30&type=section&id=14%2E%20SUBSEQUENT%20EVENTS) This section reports the acquisition of the remaining **20%** noncontrolling interest in Edmonson Electric on July 1, 2025, for **$40 million** - On July 1, 2025, IES Holdings acquired the remaining **20%** noncontrolling interest in Edmonson Electric for **$40 million**[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, market conditions, and liquidity [Overview](index=31&type=section&id=OVERVIEW) The overview highlights IES Holdings' business in integrated electrical and technology systems, noting strong demand in data centers and challenges in residential - IES Holdings designs and installs integrated electrical and technology systems and provides infrastructure products and services to data centers, residential housing, and commercial and industrial facilities[111](index=111&type=chunk) - Strong demand continues in key end markets, especially **data centers**, benefiting Communications, Infrastructure Solutions, and Commercial & Industrial segments[112](index=112&type=chunk) - The Residential segment faces challenges from housing affordability, elevated mortgage rates, and economic uncertainty, impacting single-family revenues and gross margins, and leading to reduced multi-family backlog[112](index=112&type=chunk) [Results of Operations](index=31&type=section&id=RESULTS%20OF%20OPERATIONS) This section details consolidated and segment-specific financial performance, showing significant revenue and gross profit increases, except for Residential Consolidated Financial Highlights (Three Months Ended June 30, Thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------- | :---------- | :---------- | :---------- | :------- | | Revenues | $890,158 | $768,415 | $121,743 | 15.8% | | Gross profit | $239,597 | $194,781 | $44,816 | 23.0% | | Gross profit percentage | 26.9% | 25.3% | 1.6 pp | | | SG&A expenses | $127,334 | $104,694 | $22,640 | 21.6% | | SG&A as % of revenue | 14.3% | 13.6% | 0.7 pp | | | Operating income | $111,902 | $90,176 | $21,726 | 24.1% | Consolidated Financial Highlights (Nine Months Ended June 30, Thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------- | :------------ | :------------ | :------------ | :------- | | Revenues | $2,473,665 | $2,108,592 | $365,073 | 17.3% | | Gross profit | $626,493 | $510,198 | $116,295 | 22.8% | | Gross profit percentage | 25.3% | 24.2% | 1.1 pp | | | SG&A expenses | $346,417 | $285,816 | $60,601 | 21.2% | | SG&A as % of revenue | 14.0% | 13.6% | 0.4 pp | | | Operating income | $279,216 | $225,880 | $53,336 | 23.6% | [Communications Segment](index=33&type=section&id=Communications%20Segment) The Communications segment experienced substantial growth in revenues and gross profit, driven by strong demand in the data center market Communications Segment Performance (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $299,213 (**55.6% YoY**) | $192,303 | $805,189 (**44.7% YoY**) | $556,554 | | Gross Profit | $73,124 (**97.0% YoY**) | $37,119 | $184,978 (**64.7% YoY**) | $112,329 | | Gross Margin | 24.4% | 19.3% | 23.0% | 20.2% | | Operating Income | $47,722 (**127.2% YoY**) | $21,004 | $115,956 (**80.2% YoY**) | $64,345 | - Revenue growth was primarily due to increased demand in the **data center market**[123](index=123&type=chunk)[126](index=126&type=chunk) - Gross profit and margin improvements reflect **strong demand** and successful project execution[124](index=124&type=chunk)[127](index=127&type=chunk) [Residential Segment](index=34&type=section&id=Residential%20Segment) The Residential segment saw decreased revenues due to housing market challenges and reduced multi-family backlog, despite slight gross margin improvement Residential Segment Performance (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $346,038 (**-8.3% YoY**) | $377,536 | $983,975 (**-4.7% YoY**) | $1,032,764 | | Gross Profit | $97,312 (**-7.6% YoY**) | $105,312 | $256,112 (**-4.9% YoY**) | $269,413 | | Gross Margin | 28.1% | 27.9% | 26.0% | 26.1% | | Operating Income | $33,376 (**-23.7% YoY**) | $43,720 | $79,876 (**-22.1% YoY**) | $102,507 | - Revenue decline was driven by decreased single-family electrical and plumbing/HVAC revenues due to **housing affordability concerns** and reduced multi-family backlog from elevated interest rates[129](index=129&type=chunk)[132](index=132&type=chunk) - Gross margin for the three months ended June 30, 2025, improved slightly due to **reduced material costs** and better project execution in multi-family, offsetting lower volume[130](index=130&type=chunk) [Infrastructure Solutions Segment](index=35&type=section&id=Infrastructure%20Solutions%20Segment) This segment achieved significant revenue and gross profit increases, fueled by strong demand in custom engineered solutions and recent acquisitions Infrastructure Solutions Segment Performance (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $129,488 (**26.9% YoY**) | $102,022 | $355,233 (**47.6% YoY**) | $240,699 | | Gross Profit | $46,159 (**50.6% YoY**) | $30,656 | $120,432 (**65.9% YoY**) | $72,592 | | Gross Margin | 35.6% | 30.0% | 33.9% | 30.2% | | Operating Income | $32,672 (**65.6% YoY**) | $19,730 | $82,442 (**76.3% YoY**) | $46,754 | - Revenue growth was primarily driven by strong demand in **custom engineered solutions** (e.g., generator enclosures for data centers) and expansion of field services[135](index=135&type=chunk)[138](index=138&type=chunk) - Acquisitions, including Arrow Engine Company (contributing **$5.3 million** in Q3 2025) and Greiner Industries, Inc., significantly contributed to revenue growth[135](index=135&type=chunk)[138](index=138&type=chunk) [Commercial & Industrial Segment](index=36&type=section&id=Commercial%20%26%20Industrial%20Segment) This segment reported increased revenues driven by strong demand in education, healthcare, and data centers, despite a slight decrease in gross margin Commercial & Industrial Segment Performance (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $115,419 (**19.5% YoY**) | $96,554 | $329,268 (**18.2% YoY**) | $278,575 | | Gross Profit | $23,002 (**6.0% YoY**) | $21,694 | $64,971 (**16.3% YoY**) | $55,864 | | Gross Margin | 19.9% | 22.5% | 19.7% | 20.1% | | Operating Income | $12,949 (**-0.6% YoY**) | $13,029 | $35,857 (**13.1% YoY**) | $31,698 | - Revenue growth was primarily driven by increased activity in education and healthcare, strong demand and execution in the **data center market**, and expansion in the Midwest[141](index=141&type=chunk)[145](index=145&type=chunk) - Gross profit percentage decreased for both periods compared to the prior year, which benefited from a **large data center project with favorable margins**[142](index=142&type=chunk)[146](index=146&type=chunk) [Interest and Other Expense, Net](index=37&type=section&id=INTEREST%20AND%20OTHER%20EXPENSE%2C%20NET) Total interest and other expense, net, increased for the three months due to unrealized losses, but was income for nine months due to unrealized gains Interest and Other Expense, Net (Thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total interest expense | $534 | $395 | $1,318 | $1,198 | | Interest income | $(435) | $(1,044) | $(2,055) | $(3,311) | | Other expense (income), net | $2,617 | $570 | $(7,199) | $313 | | Total interest and other expense (income), net | $3,151 | $965 | $(5,881) | $1,511 | - The increase in total other expense, net, for the three months ended June 30, 2025, was primarily due to **$3.8 million** in unrealized losses on trading securities, compared to **$1.6 million** in losses in the prior year[150](index=150&type=chunk) - For the nine months ended June 30, 2025, total other (income) expense, net, shifted to an income of **$(5.9) million**, driven by **$4.1 million** in unrealized gains on trading securities, compared to **$3.3 million** in losses in the prior year, partially offset by decreased interest income[152](index=152&type=chunk) [Provision for Income Taxes](index=38&type=section&id=PROVISION%20FOR%20INCOME%20TAXES) The provision for income taxes increased for both the three and nine months ended June 30, 2025, primarily due to higher pretax income Income Tax Expense (Thousands) | Period | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Expense| $29,464 | $22,572 | $75,537 | $57,342 | - Income tax expense increased by **$6.9 million (30.5%)** for the three months and **$18.2 million (31.7%)** for the nine months ended June 30, 2025, primarily due to increased pretax income[154](index=154&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms financial statements are prepared using GAAP, requiring estimates in revenue recognition, business combinations, and income taxes - Preparation of financial statements requires estimates and assumptions, primarily in revenue recognition of construction in progress, fair value assumptions in business combinations, stock-based compensation, legal reserves, and deferred tax assets[156](index=156&type=chunk) - No significant changes to accounting policies have occurred since the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[157](index=157&type=chunk) [Remaining Performance Obligations and Backlog](index=38&type=section&id=REMAINING%20PERFORMANCE%20OBLIGATIONS%20AND%20BACKLOG) Remaining performance obligations were **$1.3 billion** as of June 30, 2025, with total backlog reaching **$2.1 billion** Remaining Performance Obligations and Backlog (Thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :------------------------------ | :------------ | :------------- | :---------------- | :----------------- | | Remaining performance obligations | $1,295,207 | $1,225,985 | $1,214,828 | $1,175,695 | | Agreements without enforceable obligation | $771,593 | $586,724 | $539,164 | $610,459 | | Total Backlog | $2,066,800 | $1,812,709 | $1,753,992 | $1,786,154 | - The company expects to recognize approximately **$940.2 million** of its remaining performance obligations over the next 12 months[66](index=66&type=chunk) - Backlog includes signed agreements and letters of intent that are not legally enforceable until work begins[159](index=159&type=chunk) [Working Capital](index=38&type=section&id=WORKING%20CAPITAL) Working capital (excluding cash) increased by **$109.6 million** during the nine months ended June 30, 2025, driven by current asset growth - Working capital (excluding cash) increased by **$109.6 million** from September 30, 2024, to June 30, 2025[161](index=161&type=chunk) - Current assets (excluding cash) increased by **$133.6 million**, driven by a **$74.4 million** rise in accounts receivable and a **$31.8 million** increase in marketable securities[162](index=162&type=chunk) - Current liabilities increased by **$24.0 million**, primarily due to a **$28.2 million** increase in accounts payable and accrued expenses[164](index=164&type=chunk) [Surety](index=39&type=section&id=Surety) The company maintains adequate bonding capacity, with an estimated cost to complete bonded projects of approximately **$142.2 million** as of June 30, 2025 - The estimated cost to complete bonded projects was approximately **$142.2 million** as of June 30, 2025[165](index=165&type=chunk) - The company believes its current bonding capacity is **adequate** for present and future operations[165](index=165&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's liquidity, including its expanded revolving credit facility, cash flow, and stock repurchase program - The Fourth Amended and Restated Credit Agreement increased the revolving credit facility to **$300 million** and extended maturity to January 21, 2030[167](index=167&type=chunk) - Net cash provided by operating activities increased to **$154.1 million** for the nine months ended June 30, 2025, driven by increased earnings[174](index=174&type=chunk) - Net cash used in investing activities was **$114.1 million**, including **$44.9 million** for an equity investment in Jett Texas Company LLC and **$22.6 million** for business combinations[175](index=175&type=chunk) - Net cash used in financing activities was **$32.4 million**, including **$41.6 million** for common stock repurchases[176](index=176&type=chunk) [The Revolving Credit Facility](index=39&type=section&id=The%20Revolving%20Credit%20Facility) The revolving credit facility was increased to **$300 million** with a maturity date of January 21, 2030, and the company was in compliance with covenants - The maximum revolver amount increased to **$300 million**, and the maturity date was extended to January 21, 2030[167](index=167&type=chunk) - Financial covenants include a maximum Consolidated Total Leverage Ratio of **3.00 to 1.00** and a minimum Consolidated Interest Coverage Ratio of **3.00 to 1.00**, with which the company was in compliance[168](index=168&type=chunk) - As of June 30, 2025, the company had **$20 million** in borrowings and **$5.5 million** in outstanding letters of credit, leaving **$274.5 million** in total availability[172](index=172&type=chunk) [Operating Activities](index=40&type=section&id=Operating%20Activities) Net cash provided by operating activities increased to **$154.1 million** for the nine months ended June 30, 2025, driven by higher earnings Net Cash Provided by Operating Activities (Thousands) | Period | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $154,095 | $141,621 | - The increase in operating cash flow resulted from increased earnings, partially offset by a **$26.9 million** increase in net investments in marketable securities[174](index=174&type=chunk) [Investing Activities](index=40&type=section&id=Investing%20Activities) Net cash used in investing activities increased to **$114.1 million**, including equity investments, capital expenditures, and business combinations Net Cash Used in Investing Activities (Thousands) | Period | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in investing activities | $(114,099) | $(96,397) | - Key investing activities included a **$44.9 million** equity investment in Jett Texas Company LLC and **$22.6 million** for business combinations (primarily Arrow Engine Company)[175](index=175&type=chunk) - Capital expenditures amounted to **$47.3 million**, reflecting purchases of new assets and support for business growth[175](index=175&type=chunk) [Financing Activities](index=40&type=section&id=Financing%20Activities) Net cash used in financing activities decreased to **$32.4 million**, primarily due to lower distributions and the absence of a prior-year purchase Net Cash Used in Financing Activities (Thousands) | Activity | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in financing activities | $(32,380) | $(76,097) | | Purchase of treasury stock | $(41,593) | $(24,320) | | Distribution to noncontrolling interest| $(7,536) | $(13,533) | | Purchase of noncontrolling interest | — | $(31,200) | - The decrease in cash used was largely due to the prior year's **$31.2 million** purchase of noncontrolling interest in Bayonet and higher distributions to noncontrolling interests in 2024[176](index=176&type=chunk) [Stock Repurchase Program](index=40&type=section&id=Stock%20Repurchase%20Program) The Board authorized a new **$200 million** stock repurchase program, under which **173,262 shares** were repurchased during the nine months ended June 30, 2025 - A new stock repurchase program for up to **$200 million** of common stock was authorized on July 31, 2024[177](index=177&type=chunk) - **173,262 shares** were repurchased under the program during the nine months ended June 30, 2025[177](index=177&type=chunk) [Material Cash Requirements](index=40&type=section&id=MATERIAL%20CASH%20REQUIREMENTS) Capital expenditures for fiscal year 2025 are projected at **$70 million to $80 million**, with sufficient liquidity expected for the next 12 months - Capital expenditure expectations for fiscal year 2025 are in the range of **$70 million to $80 million**, up from **$45.2 million** in fiscal year 2024, to expand capacity[179](index=179&type=chunk) - The company had no firm purchase commitments for materials (e.g., copper, aluminum wire) outstanding as of June 30, 2025[179](index=179&type=chunk) - Cash and cash equivalents, cash flow from operations, and revolving credit facility availability are expected to be **sufficient** to meet cash requirements for at least the next 12 months[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses exposure to market risks, including commodity price fluctuations, investment volatility, and interest rate risk on floating-rate debt - The company is exposed to **commodity price risks** (copper, aluminum, steel, etc.) due to the fixed-price nature of many contracts, though it expects to pass some costs to customers[182](index=182&type=chunk) - Investment risk arises from market price volatility of marketable securities; a **10% change** in their **$66.8 million** fair value (as of June 30, 2025) would cause a **$6.7 million** change in pre-tax income[183](index=183&type=chunk) - Interest rate risk stems from floating-rate debt under the revolving credit facility; a **one percentage point increase** in interest rates would lead to a **$0.2 million** pre-tax annual increase in interest expense on outstanding debt as of June 30, 2025[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204%2E%20Controls%20and%20Procedures) No material changes occurred in internal control over financial reporting, and disclosure controls and procedures were effective as of June 30, 2025 - No material changes occurred in the company's internal control over financial reporting during the fiscal quarter[185](index=185&type=chunk) - The company is implementing a new ERP system in phases, updating internal controls as appropriate[185](index=185&type=chunk) - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of June 30, 2025, ensuring timely and accurate reporting[186](index=186&type=chunk)[187](index=187&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=46&type=section&id=Item%201%2E%20Legal%20Proceedings) This section refers to Note 12 of the financial statements for information regarding legal proceedings, with no new material proceedings disclosed - Information on legal proceedings is incorporated by reference from Note 12, "Commitments and Contingencies – Legal Matters," in Part I, Item 1 of this Quarterly Report[189](index=189&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A%2E%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details stock repurchase activity, with **33,900 shares** repurchased in April 2025 at an average price of **$157.16** per share Stock Repurchase Activity (April 2025) | Date | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plan | | :------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------ | :------------------------------------------------------------------------- | | April 1, 2025 – April 30, 2025 | 33,900 | $157.16 | 33,900 | $167,950,925 | - The Board authorized a new stock repurchase program for up to **$200 million** of common stock on July 31, 2024[192](index=192&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[193](index=193&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - No mine safety disclosures were reported[193](index=193&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205%2E%20Other%20Information) This section reports that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[193](index=193&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including XBRL documents and certifications from the CEO and CFO - Exhibits include XBRL Schema, Label, Presentation, Definition, and Calculation Linkbase Documents, as well as Inline XBRL Instance and Cover Page Interactive Data Files[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk) - Certifications from the President and Chief Executive Officer (Matthew J. Simmes) and Senior Vice President, Chief Financial Officer and Treasurer (Tracy A. McLauchlin) are filed under Rule 13a-14(a)/15d-14(a) and Section 1350[198](index=198&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) This section contains the required signatures for the Quarterly Report on Form 10-Q, certifying its submission by the Principal Financial Officer - The report was duly signed on August 1, 2025, by Tracy A. McLauchlin, Senior Vice President, Chief Financial Officer and Treasurer, as the Principal Financial Officer and Authorized Signatory[200](index=200&type=chunk)[201](index=201&type=chunk)

Overview of Results - IES Holdings, Inc. reported a 16% increase in revenue to $890 million for the third quarter of fiscal 2025 compared to $768 million in the same quarter of fiscal 2024 [6] - Operating income rose by 24% to $111.9 million from $90.2 million year-over-year [6] - Net income attributable to IES increased by 24% to $77.2 million, with diluted earnings per share rising to $3.81 from $2.67 [6][21] Segment Performance - The Communications segment generated revenue of $299.2 million, a 56% increase from $192.3 million in the prior year, with operating income rising to $47.8 million from $21.0 million [4][30] - The Residential segment's revenue decreased by 8% to $346.1 million due to a challenging housing market, with operating income falling to $33.4 million from $43.7 million [5][30] - Infrastructure Solutions segment revenue increased by 27% to $129.5 million, with operating income improving to $32.6 million from $19.8 million [7][30] - The Commercial & Industrial segment saw revenue rise by 20% to $115.4 million, with operating income slightly decreasing to $12.9 million from $13.0 million [8][30] Financial Position - Remaining performance obligations stood at approximately $1.3 billion, indicating future revenue to be recognized from current contracts [6][14] - Backlog was approximately $2.1 billion, reflecting signed agreements and letters of intent [6][14] - The company ended the quarter with $88.4 million in cash and restricted cash, net of debt, and $66.8 million in marketable securities [11] Capital Allocation and Investments - IES Holdings invested $17.1 million in capital expenditures and funded a $7 million deposit for the purchase of an industrial fabrication operation [12] - The company repurchased 33,900 shares of common stock for $5.3 million, with $168.0 million remaining under its stock repurchase authorization [12]

Core Viewpoint - IES Holdings, Inc. is set to release its fiscal 2025 third quarter results on August 1, 2025, before market opening [1] Company Overview - IES Holdings, Inc. specializes in designing and installing integrated electrical and technology systems, along with providing infrastructure products and services [2] - The company serves various end markets, including data centers, residential housing, and commercial and industrial facilities [2] - IES employs over 9,000 individuals and operates primarily within the United States [2]

Core Viewpoint - IES Holdings, Inc. has completed its executive succession plan, appointing Matt Simmes as President and CEO, while Jeff Gendell transitions to Executive Chairman of the Board [1][2] Leadership Changes - Matt Simmes has taken over as President and CEO, expressing commitment to build on the company's growth legacy established under Jeff Gendell's leadership [2] - Jeff Gendell will continue to contribute as Executive Chairman, collaborating with Simmes and the senior leadership team [2] - Jordan Lyman has been appointed as President of IES's Residential segment, bringing over 20 years of experience within the company [2][3] Company Overview - IES Holdings, Inc. specializes in designing and installing integrated electrical and technology systems, serving various end markets including data centers, residential housing, and commercial and industrial facilities [4] - The company employs more than 9,000 individuals across the United States [4]

Core Viewpoint - IES Holdings, Inc. announces the succession of Matthew Simmes as Chief Executive Officer effective July 1, 2025, as part of the company's executive succession plan, with Jeffrey Gendell transitioning to Executive Chairman [1] Group 1: Leadership Transition - Matthew Simmes has over 31 years of experience at IES, having held various senior roles, including President and Chief Operating Officer since 2023 [2] - Jeffrey Gendell, who has been with the company since 2016, will continue to lead the Board of Directors while working closely with Simmes [1][3] Group 2: Strategic Focus - Gendell emphasizes that Simmes' leadership has been crucial for the operational and financial success of IES's four business segments and in executing the company's strategic vision [3] - The company has experienced significant growth over the last five years, positioning Simmes well for the CEO role [3] Group 3: Company Overview - IES designs and installs integrated electrical and technology systems, providing infrastructure products and services across various markets, including data centers and residential housing [4] - The company employs over 9,000 individuals serving clients throughout the United States [4]

Ms. Janzen brings over 30 years of experience in various financial leadership roles and has served as Executive Vice President and Chief Financial Officer of Vestis Corporation (NYSE: VSTS) since February 2025 after working with Vestis as a finance consultant since October 2024. Prior to joining Vestis, she was a finance executive in residence at the Fernweh Group from January to May 2024, working as Chief Financial Officer for Dabico Airport Solutions, and served as Senior Vice President, Chief Financial O ...

Group 1 - The individual is pursuing an MBA and draws inspiration from renowned investors such as Warren Buffett, Peter Lynch, and Terry Smith, focusing on quality companies at reasonable valuations [1] - The belief is that long-term fundamentals drive share prices, with a focus on predicting a business's earnings per share [1]

Financial Performance - Revenue for the second quarter of fiscal year 2025 reached $834 million, an 18% increase compared to $706 million in the second quarter of fiscal year 2024[7, 9] - Operating income for the second quarter of fiscal year 2025 was $92.7 million, a 19% increase from $77.7 million in the second quarter of fiscal year 2024[7, 9, 16] - Earnings per share for the second quarter of fiscal year 2025 were $3.50, while adjusted earnings per share were $3.30[7] - Year-to-date revenue for fiscal year 2025 totaled $1584 million, an 18% increase from $1340 million in the same period of fiscal year 2024[9, 16] - Year-to-date operating income for fiscal year 2025 was $167.3 million, a 23% increase from $135.7 million in the same period of fiscal year 2024[9, 16] - Year-to-date earnings per share reached $6.22, and adjusted earnings per share were $5.94, representing increases of 50% and 40% respectively[9] Segment Performance - Communications segment revenue for the second quarter of fiscal year 2025 was $273.1 million, a 41% increase from the second quarter of fiscal year 2024, with an 81% increase in operating income to $39.6 million[11, 19] - Infrastructure Solutions segment revenue for the second quarter of fiscal year 2025 was $117.6 million, a 55% increase from the second quarter of fiscal year 2024, with a 65% increase in operating income to $26.5 million[11, 19] Backlog - Remaining performance obligations, a GAAP measure of future revenue, stood at $1.2 billion[7] - Record backlog reached $1.8 billion[7] - Backlog increased from $1.363 billion on March 31, 2024, to $1.813 billion on March 31, 2025[13, 21]

Financial Performance - Revenue for Q2 2025 was $834 million, an 18% increase from $706 million in Q2 2024[6] - Operating income for Q2 2025 was $92.7 million, a 19% increase from $77.7 million in Q2 2024[6] - Net income attributable to IES for Q2 2025 was $70.7 million, a 34% increase from $52.9 million in Q2 2024, with diluted earnings per share of $3.50 compared to $2.29[6] - Revenues for the three months ended March 31, 2025, were $834.0 million, a 18.1% increase from $705.8 million in the same period of 2024[26] - Gross profit for the six months ended March 31, 2025, was $386.9 million, up 22.6% from $315.4 million in the prior year[26] - Net income attributable to IES Holdings, Inc. for the three months ended March 31, 2025, was $70.7 million, representing a 33.8% increase compared to $52.9 million in the same period of 2024[26] - Adjusted net income attributable to common stockholders for the six months ended March 31, 2025, was $120.1 million, a 38.8% increase from $86.5 million in the same period of 2024[27] - Basic earnings per share attributable to common stockholders for the three months ended March 31, 2025, was $3.54, compared to $2.32 for the same period in 2024, reflecting a 52.9% increase[26] - Net income for the six months ended March 31, 2025, increased to $130.3 million, up from $100.4 million in the same period of 2024, representing a growth of 29.5%[31] - Total revenue for the six months ended March 31, 2025, reached $1,583.5 million, compared to $1,340.2 million in the prior year, reflecting a year-over-year increase of 18.1%[33] - Adjusted EBITDA for the six months ended March 31, 2025, was $192.1 million, up from $147.5 million in the same period of 2024, marking a growth of 30.2%[35] Backlog and Future Revenue - Remaining performance obligations as of March 31, 2025, were approximately $1.2 billion, indicating future revenue to be recognized[6][16] - Backlog as of March 31, 2025, was approximately $1.8 billion, reflecting strong demand[6][16] - Remaining performance obligations as of March 31, 2025, totaled $1,226 million, compared to $1,176 million in September 2024, indicating an increase of 4.3%[37] - Backlog as of March 31, 2025, was $1,813 million, up from $1,786 million in September 2024, showing a growth of 1.5%[37] Segment Performance - Communications segment revenue was $273.1 million in Q2 2025, a 41% increase from Q2 2024, driven by demand in the data center market[7] - Infrastructure Solutions segment revenue was $117.6 million in Q2 2025, a 55% increase from Q2 2024, with contributions from recent acquisitions[9] - Commercial & Industrial segment revenue was $125.4 million in Q2 2025, a 29% increase from Q2 2024, reflecting solid demand[11] - The Communications segment generated revenues of $506.0 million for the six months ended March 31, 2025, up from $364.3 million in the same period of 2024, representing a growth of 38.8%[33] Cash Flow and Investments - Cash flows from operating activities for the six months ended March 31, 2025, amounted to $62.1 million, compared to $58.7 million in the prior year, reflecting a growth of 5.8%[31] - Net cash used in investing activities for the six months ended March 31, 2025, was $97.1 million, significantly higher than $11.4 million in the same period of 2024[31] - The company reported a net increase in cash and cash equivalents of $(78.4) million for the six months ended March 31, 2025, compared to an increase of $30.2 million in the prior year[31] Shareholder Information - The company repurchased 118,314 shares of common stock for $20.4 million, with $173.3 million remaining under the stock repurchase authorization[14] - The company has a controlling shareholder, which may influence decisions that are not aligned with other shareholders[21] Assets and Equity - Total assets as of March 31, 2025, were $1,364.6 million, an increase from $1,244.0 million as of September 30, 2024[29] - Total stockholders' equity increased to $705.8 million as of March 31, 2025, compared to $611.1 million as of September 30, 2024[29] - Cash and cash equivalents decreased to $22.4 million as of March 31, 2025, from $100.8 million as of September 30, 2024[29] Profitability Metrics - The company reported a gross profit margin of 25.1% for the three months ended March 31, 2025, compared to 24.3% for the same period in 2024[26] - Operating income for the six months ended March 31, 2025, was $167.3 million, compared to $135.7 million in the same period of 2024, an increase of 23.3%[33]