# Willdan Group, Inc.: Form 10-Q for the period ended Sep 29, 2023

- Company: [Willdan Group, Inc.](/companies/wldn.md) (CIK 1370450)
- Form: 10-Q
- Filed: 2023-11-03
- Accepted by EDGAR: Nov 2, 2023, 18:46 ET
- Period: 2023-09-29
- Accession: 0001558370-23-017486
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1370450/000155837023017486/wldn-20230929x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1370450/000155837023017486/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-29 | $132.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-12-31 to 2023-09-29 | $354.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-29 | $89.3m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2022-12-31 to 2023-09-29 | $229.1m | us-gaap:CostOfRevenue |
| Operating income | 3 months, 2023-07-01 to 2023-09-29 | $3.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-12-31 to 2023-09-29 | $10.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-29 | $713.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-12-31 to 2023-09-29 | $1.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-29 | $1.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-12-31 to 2023-09-29 | $2.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-29 | $0.11 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-12-31 to 2023-09-29 | $0.21 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-29 | $0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-12-31 to 2023-09-29 | $0.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-29 | 13,709,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-12-31 to 2023-09-29 | 13,563,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-12-31 to 2023-09-29 | $24.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-12-31 to 2023-09-29 | $7.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-29 | $12.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-29 | $164.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-29 | $401.6m | us-gaap:Assets |
| Current liabilities | at 2023-09-29 | $107.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-29 | $210.5m | us-gaap:Liabilities |
| Long-term debt | at 2023-09-29 | $91.4m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-29 | $8.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-29 | $191.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,313 characters.

### Our Company

We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.

Our broad portfolio of services operates within two financial reporting segments: (1) Energy and (2) Engineering and Consulting. The interfaces and synergies between these segments are important elements of our strategy to design and deliver trusted, comprehensive, innovative, and proven solutions and services for our customers.

Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations in the U.S. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend. Our energy efficiency services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.

Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.

### Key Developments

#### New Credit Facilities

On September 29, 2023 (the “Closing Date”), we and certain of our subsidiaries entered into a credit agreement (the “Credit Agreement”) with a syndicate of financial institutions as lenders and BMO Bank, N.A. (“BMO”), as administrative agent. The Credit Agreement replaced our Amended and Restated Credit Agreement, dated as of June 26, 2019, (as amended, the “Prior Credit Agreement”), by and among the Company, the guarantors party thereto, BMO as administrative agent and lender and the lenders party thereto. For more information about our indebtedness, see Part I, Item 1, Note 5, “*Debt Obligations”*, and Part I, Item 3, “*Quantitative and Qualitative Disclosures About Market Risk”.*

### Results of Operations

#### Third Quarter and Nine Months Overview

The following table sets forth, for the periods indicated, certain information derived from our consolidated statements of comprehensive income(1):

*(in thousands, except percentages)*

| ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended September 29, 2023 ​ ​ | ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ September 30, 2022 ​ ​ | ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ |
| --- | --- | --- | --- | ---: | --- | --- | --- | ---: | --- | --- | --- | ---: |
| Contract revenue | ​ | $132,738 |  | 100.0% |  | $121,399 |  | 100.0% |  | $11,339 |  | 9.3% |
| Direct costs of contract revenue: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Salaries and wages | ​ | ​ 21,856 | ​ | 16.5 ​ | ​ | ​ 21,420 | ​ | 17.6 ​ | ​ | ​ 436 | ​ | 2.0 ​ |
| Subcontractor services and other direct costs | ​ | ​ 67,454 | ​ | 50.8 ​ | ​ | ​ 62,457 | ​ | 51.4 ​ | ​ | ​ 4,997 | ​ | 8.0 ​ |
| Total direct costs of contract revenue | ​ | ​ 89,310 | ​ | 67.3 ​ | ​ | ​ 83,877 | ​ | 69.1 ​ | ​ | ​ 5,433 | ​ | 6.5 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gross profit | ​ | ​ 43,428 | ​ | 32.7 ​ | ​ | ​ 37,522 | ​ | 30.9 ​ | ​ | ​ 5,906 | ​ | 15.7 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| General and administrative expenses: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Salaries and wages, payroll taxes and employee benefits | ​ | ​ 23,805 | ​ | 17.9 ​ | ​ | ​ 20,373 | ​ | 16.8 ​ | ​ | ​ 3,432 | ​ | 16.8 ​ |
| Facilities and facilities related | ​ | ​ 2,303 | ​ | 1.7 ​ | ​ | ​ 2,228 | ​ | 1.8 ​ | ​ | ​ 75 | ​ | 3.4 ​ |
| Stock-based compensation | ​ | ​ 1,244 | ​ | 0.9 ​ | ​ | ​ 1,607 | ​ | 1.3 ​ | ​ | ​ (363) | ​ | (22.6) ​ |
| Depreciation and amortization | ​ | ​ 4,190 | ​ | 3.2 ​ | ​ | ​ 4,405 | ​ | 3.6 ​ | ​ | ​ (215) | ​ | (4.9) ​ |
| Other | ​ | ​ 8,049 | ​ | 6.1 ​ | ​ | ​ 9,664 | ​ | 8.0 ​ | ​ | ​ (1,615) | ​ | (16.7) ​ |
| Total general and administrative expenses | ​ | ​ 39,591 | ​ | 29.8 ​ | ​ | ​ 38,277 | ​ | 31.5 ​ | ​ | ​ 1,314 | ​ | 3.4 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Income (loss) from operations | ​ | ​ 3,837 | ​ | 2.9 ​ | ​ | ​ (755) | ​ | (0.6) ​ | ​ | ​ 4,592 | ​ | 608.2 ​ |
| Other income (expense): | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest expense | ​ | ​ (2,437) | ​ | (1.8) ​ | ​ | ​ (1,435) | ​ | (1.2) ​ | ​ | ​ (1,002) | ​ | 69.8 ​ |
| Other, net | ​ | ​ 879 | ​ | 0.7 ​ | ​ | ​ 740 | ​ | 0.6 ​ | ​ | ​ 139 | ​ | 18.8 ​ |
| Total other income (expense) | ​ | ​ (1,558) | ​ | (1.2) ​ | ​ | ​ (695) | ​ | (0.6) ​ | ​ | ​ (863) | ​ | 124.2 ​ |
| Income (Loss) before income tax expense | ​ | ​ 2,279 | ​ | 1.7 ​ | ​ | ​ (1,450) | ​ | (1.2) ​ | ​ | ​ 3,729 | ​ | 257.2 ​ |
| Income tax expense (benefit) | ​ | ​ 713 | ​ | 0.5 ​ | ​ | ​ (1,526) | ​ | (1.3) ​ | ​ | ​ 2,239 | ​ | (146.7) ​ |
| Net income (loss) | ​ | $1,566 | ​ | 1.2 ​ | ​ | $76 | ​ | 0.1 ​ | ​ | $1,490 | ​ | 1,960.5 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

*(1) Percentages are expressed as a percentage of contract revenue and may not total due to rounding.*

*(in thousands, except percentages)*

| ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Nine Months Ended September 29, 2023 ​ ​ | ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ September 30, 2022 ​ ​ | ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ |
| --- | --- | --- | --- | ---: | --- | --- | --- | ---: | --- | --- | --- | ---: |
| Contract revenue |  | $354,418 |  | 100.0% |  | $315,882 |  | 100.0% |  | $38,536 |  | 12.2% |
| Direct costs of contract revenue: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Salaries and wages | ​ | ​ 63,568 | ​ | 17.9 ​ | ​ | ​ 61,514 | ​ | 19.5 ​ | ​ | ​ 2,054 | ​ | 3.3 ​ |
| Subcontractor services and other direct costs | ​ | ​ 165,508 | ​ | 46.7 ​ | ​ | ​ 153,896 | ​ | 48.7 ​ | ​ | ​ 11,612 | ​ | 7.5 ​ |
| Total direct costs of contract revenue | ​ | ​ 229,076 | ​ | 64.6 ​ | ​ | ​ 215,410 | ​ | 68.2 ​ | ​ | ​ 13,666 | ​ | 6.3 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gross profit | ​ | ​ 125,342 | ​ | 35.4 ​ | ​ | ​ 100,472 | ​ | 31.8 ​ | ​ | ​ 24,870 | ​ | 24.8 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| General and administrative expenses: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Salaries and wages, payroll taxes and employee benefits | ​ | ​ 68,606 | ​ | 19.4 ​ | ​ | ​ 60,169 | ​ | 19.0 ​ | ​ | ​ 8,437 | ​ | 14.0 ​ |
| Facilities and facilities related | ​ | ​ 7,200 | ​ | 2.0 ​ | ​ | ​ 6,999 | ​ | 2.2 ​ | ​ | ​ 201 | ​ | 2.9 ​ |
| Stock-based compensation | ​ | ​ 4,064 | ​ | 1.1 ​ | ​ | ​ 6,626 | ​ | 2.1 ​ | ​ | ​ (2,562) | ​ | (38.7) ​ |
| Depreciation and amortization | ​ | ​ 12,518 | ​ | 3.5 ​ | ​ | ​ 13,240 | ​ | 4.2 ​ | ​ | ​ (722) | ​ | (5.5) ​ |
| Other | ​ | ​ 22,629 | ​ | 6.4 ​ | ​ | ​ 25,099 | ​ | 7.9 ​ | ​ | ​ (2,470) | ​ | (9.8) ​ |
| Total general and administrative expenses | ​ | ​ 115,017 | ​ | 32.5 ​ | ​ | ​ 112,133 | ​ | 35.5 ​ | ​ | ​ 2,884 | ​ | 2.6 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Income (loss) from operations | ​ | ​ 10,325 | ​ | 2.9 ​ | ​ | ​ (11,661) | ​ | (3.7) ​ | ​ | ​ 21,986 | ​ | 188.5 ​ |
| Other income (expense): | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest expense | ​ | ​ (7,110) | ​ | (2.0) ​ | ​ | ​ (3,216) | ​ | (1.0) ​ | ​ | ​ (3,894) | ​ | 121.1 ​ |
| Other, net | ​ | ​ 1,392 | ​ | 0.4 ​ | ​ | ​ 1,266 | ​ | 0.4 ​ | ​ | ​ 126 | ​ | 10.0 ​ |
| Total other income (expense) | ​ | ​ (5,718) | ​ | (1.6) ​ | ​ | ​ (1,950) | ​ | (0.6) ​ | ​ | ​ (3,768) | ​ | 193.2 ​ |
| Income (Loss) before income tax expense | ​ | ​ 4,607 | ​ | 1.3 ​ | ​ | ​ (13,611) | ​ | (4.3) ​ | ​ | ​ 18,218 | ​ | 133.8 ​ |
| Income tax expense (benefit) | ​ | ​ 1,712 | ​ | 0.5 ​ | ​ | ​ (5,588) | ​ | (1.8) ​ | ​ | ​ 7,300 | ​ | (130.6) ​ |
| Net income (loss) | ​ | $2,895 | ​ | 0.8 ​ | ​ | $(8,023) | ​ | (2.5) ​ | ​ | $10,918 | ​ | 136.1 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

*(1) Percentages are expressed as a percentage of contract revenue and may not total due to rounding.*

The following tables provides information about disaggregated revenue of our two segments, Energy and Engineering and Consulting, by contract type, client type and geographical region:

*(in thousands)*

| ​ ​ ​ ​ Contract Type | ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 29, 2023 Energy Engineering and Consulting Total ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | --- |
| Time-and-materials | ​ | $9,382 ​ $16,629 ​ $26,011 |
| Unit-based | ​ | ​ 42,119 ​ ​ 4,182 ​ ​ 46,301 |
| Fixed price | ​ | ​ 59,529 ​ ​ 897 ​ ​ 60,426 |
| Total (1) | ​ | $111,030 ​ $21,708 ​ $132,738 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **Client Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Commercial | ​ | $7,448 ​ $1,588 ​ $9,036 |
| Government | ​ | ​ 52,410 ​ ​ 20,054 ​ ​ 72,464 |
| Utilities (2) | ​ | ​ 51,172 ​ ​ 66 ​ ​ 51,238 |
| Total (1) | ​ | $111,030 ​ $21,708 ​ $132,738 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| Geography (3) | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Domestic | ​ | $111,030 ​ $21,708 ​ $132,738 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **​** |  | **Nine months ended September 29, 2023** |
| **​** |  | **Energy** **Engineering and Consulting** **Total** |
| **​** |  | (in thousands) |
| **Contract Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Time-and-materials | ​ | $26,038 ​ $47,626 ​ $73,664 |
| Unit-based | ​ | ​ 126,946 ​ ​ 11,616 ​ ​ 138,562 |
| Fixed price | ​ | ​ 139,346 ​ ​ 2,846 ​ ​ 142,192 |
| Total (1) | ​ | $292,330 ​ $62,088 ​ $354,418 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **Client Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Commercial | ​ | $21,607 ​ $4,128 ​ $25,735 |
| Government | ​ | ​ 119,028 ​ ​ 57,759 ​ ​ 176,787 |
| Utilities (2) | ​ | ​ 151,695 ​ ​ 201 ​ ​ 151,896 |
| Total (1) | ​ | $292,330 ​ $62,088 ​ $354,418 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| Geography (3) | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Domestic | ​ | $292,330 ​ $62,088 ​ $354,418 |

*(in thousands)*

| ​ ​ ​ ​ Contract Type | ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, 2022 Energy Engineering and Consulting Total ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | --- |
| Time-and-materials | ​ | $7,468 ​ $13,880 ​ $21,348 |
| Unit-based | ​ | ​ 43,039 ​ ​ 3,791 ​ ​ 46,830 |
| Fixed price | ​ | ​ 52,118 ​ ​ 1,103 ​ ​ 53,221 |
| Total (1) | ​ | $102,625 ​ $18,774 ​ $121,399 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **Client Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Commercial | ​ | $6,848 ​ $1,376 ​ $8,224 |
| Government | ​ | ​ 48,073 ​ ​ 17,348 ​ ​ 65,421 |
| Utilities (2) | ​ | ​ 47,704 ​ ​ 50 ​ ​ 47,754 |
| Total (1) | ​ | $102,625 ​ $18,774 ​ $121,399 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| Geography (3) | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Domestic | ​ | $102,625 ​ $18,774 ​ $121,399 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **​** |  | **Nine months ended September 30, 2022** |
| **​** |  | **Energy** **Engineering and Consulting** **Total** |
| **​** |  | (in thousands) |
| **Contract Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Time-and-materials | ​ | $23,873 ​ $40,221 ​ $64,094 |
| Unit-based | ​ | ​ 128,540 ​ ​ 10,530 ​ ​ 139,070 |
| Fixed price | ​ | ​ 109,773 ​ ​ 2,945 ​ ​ 112,718 |
| Total (1) | ​ | $262,186 ​ $53,696 ​ $315,882 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| **Client Type** | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Commercial | ​ | $21,638 ​ $4,330 ​ $25,968 |
| Government | ​ | ​ 96,293 ​ ​ 49,139 ​ ​ 145,432 |
| Utilities (2) | ​ | ​ 144,255 ​ ​ 227 ​ ​ 144,482 |
| Total (1) | ​ | $262,186 ​ $53,696 ​ $315,882 |
| ​ | ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| Geography (3) | **​** | ​ ​ ​ ​ ​ ​ ​ ​ |
| Domestic | ​ | $262,186 ​ $53,696 ​ $315,882 |

#### (1) Amounts may not add to the totals due to rounding.

*(2) Includes the portion of revenue related to small business programs paid by the end user/customer.*

(3) *Revenue from our foreign operations were immaterial for the three and nine months ended September 29, 2023 and September 30, 2022.*

#### Three Months Ended September 29, 2023 Compared to Three Months Ended September 30, 2022

*Contract revenue.* Consolidated contract revenue increased $11.3 million, or 9.3%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022, due to incremental revenues in both our Energy segment and our Engineering and Consulting segment.

Contract revenue in our Energy segment increased $8.4 million, or 8.2%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022, primarily as a result of increases in construction management revenues, utility program revenues, and planning and advisory consulting revenues.

Contract revenue in our Engineering and Consulting segment increased $2.9 million, or 15.6%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022, primarily due to increased demand for services provided to our clients.

*Direct costs of contract revenue.* Direct costs of consolidated contract revenue increased $5.4 million, or 6.5% for the three months ended September 29, 2023, compared to the three months ended September 30, 2022, primarily as a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages decreased to 16.5% in the three months ended September 29, 2023 from 17.6% in the three months ended September 30, 2022, while subcontractor services and other direct costs decreased to 50.8% in the three months ended September 29, 2023 from 51.4% in the three months ended September 30, 2022.

Direct costs of contract revenue in our Energy segment increased $3.8 million, or 5.1% for the three months ended September 29, 2023, compared to the three months ended September 30, 2022. Direct costs of contract revenue for the Engineering and Consulting segment increased $1.6 million, or 18.2%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022.

Subcontractor services and other direct costs increased by $5.0 million, or 8.0%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022, primarily due to the increase in construction management revenues and utility program revenues. Salaries and wages remained relatively flat in the three months ended September 29, 2023, compared to the three months ended September 30, 2022.

*Gross Profit*. Gross profit increased 15.7% to $43.4 million, or 32.7% gross margin, for the three months ended September 29, 2023, compared to gross profit of $37.5 million, or 30.9% gross margin, for the three months ended September 30, 2022. The increase in our gross margin was primarily driven by changes in the mix of revenues as described above combined with the absence of project startup costs for new utility programs that were incurred during the third quarter of fiscal year 2022 but did not recur in the third quarter of fiscal year 2023.

*General and administrative expenses.* General and administrative (“G&A”) expenses increased $1.3 million, or 3.4%, in the three months ended September 29, 2023, compared to the three months ended September 30, 2022. G&A expenses consisted of an increase of $2.0 million in the Engineering and Consulting segment, partially offset by a decrease of $0.2 million in the Energy segment and a decrease of $0.5 million in unallocated corporate expenses.

Within G&A expenses, the increase of $3.4 million in salaries and wages, payroll taxes and employee benefits was partially offset by a decrease of $1.6 million in other general and administrative expenses combined with a decrease of $0.4 million in stock-based compensation and a decrease of $0.2 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit. The decrease in other general and administrative expenses was primarily due to contingent consideration expense related to prior acquisitions in the third quarter of fiscal year 2022 that did not recur in the same period for 2023. The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the end of their corresponding vesting periods, partially offset by new equity awards being issued at lower stock prices. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.

*Income (loss) from operations.* Operating income was $3.8 million for the three months ended September 29, 2023, compared to an operating loss of $0.8 million for the three months ended September 29, 2022, as a result of the factors noted above.

*Total other expense, net.* Total other expense, net, increased $0.9 million, or 124.2%, for the three months ended September 29, 2023, compared to the three months ended September 30, 2022, primarily due to higher interest expense as a result of the increase in market interest rates which directly affected our variable interest rates under our credit facilities, combined with a one-time charge of $0.5 million for unamortized debt issuance costs related to our prior credit facilities.

*Income tax expense (benefit).* We recorded an income tax expense of $0.7 million for the three months ended September 29, 2023, compared to a tax benefit of $1.5 million for the three months ended September 30, 2022. The tax expense is primarily attributable to the income before income tax combined with various tax deductions and credits.

*Net income (loss).* Our net income was $1.6 million for the three months ended September 29, 2023, as compared to a net income of $0.1 million for the three months ended September 30, 2022. The increase in net income was primarily attributable to the increase in revenue and gross profit, partially offset by higher interest expense and income tax expense.

#### Nine Months Ended September 29, 2023 Compared to Nine Months Ended September 30, 2022

*Contract revenue.* Consolidated contract revenue increased $38.5 million, or 12.2%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, due to incremental revenues in both our Energy segment and in our Engineering and Consulting segment.

Contract revenue in our Energy segment increased $30.1 million, or 11.5%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, primarily as a result of increases in software licensing revenue and higher demand across the full spectrum of our energy services. Contract revenue in our Engineering and Consulting segment increased $8.4 million, or 15.6%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, primarily due to increased demand for services provided to our clients.

*Direct costs of contract revenue.* Direct costs of consolidated contract revenue increased $13.7 million, or 6.3%, for the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, primarily as a result of the increase, and change of mix, in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages decreased to 17.9% in the nine months ended September 29, 2023, from 19.5% in the nine months ended September 30, 2022, while subcontractor services and other direct costs decreased to 46.7% in the nine months ended September 29, 2023 from 48.7% in the nine months ended September 30, 2022.

Direct costs of contract revenue in our Energy segment increased $9.6 million, or 5.1% for the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022. Direct costs of contract revenue for the Engineering and Consulting segment increased $4.1 million, or 15.8%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022.

Subcontractor services and other direct costs increased by $11.6 million, or 7.5%, and salaries and wages increased by $2.1 million, or 3.3%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, primarily as a result of the increases in contract revenue.

*Gross Profit*. Gross profit increased 24.8% to $125.3 million, or 35.4% gross margin, for the nine months ended September 29, 2023, compared to gross profit of $100.5 million, or 31.8% gross margin, for the nine months ended September 30, 2022. The increase in our gross margin was primarily driven by higher software licensing revenue and changes in the mix of revenues as described above combined with the absence of project startup costs for new utility programs that were incurred during the same period of fiscal year 2022 but did not recur in the same period for fiscal year 2023.

*General and administrative expenses.* G&A expenses increased $2.9 million, or 2.6%, in the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022. G&A expenses consisted of an increase of $1.6 million in the Energy segment combined with an increase of $3.8 million in the Engineering and Consulting segment, partially offset by a decrease of $2.5 million in unallocated corporate expenses.

Within G&A expenses, the increase of $8.4 million in salaries and wages, payroll taxes and employee benefits was partially offset by a decrease of $2.6 million in stock-based compensation, a decrease of $2.5 million in other general and administrative expenses, and a decrease of $0.7 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit. The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the end of their corresponding vesting periods, partially offset by new equity awards being issued at lower stock prices. The decrease in other general and administrative expenses was primarily due to contingent consideration expense related to prior acquisitions that occurred during the nine months ended September 30, 2022 that did not recur in the same period for 2023. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions.

*Income (loss) from operations.* Operating income was $10.3 million for the nine months ended September 29, 2023, compared to an operating loss of $11.7 million for the nine months ended September 30, 2022, as a result of the factors noted above.

*Total other expense, net.* Total other expense, net, increased $3.8 million, or 193.2%, for the nine months ended September 29, 2023, compared to the nine months ended September 30, 2022, primarily due to higher interest expense as a result of the increase in market interest rates which directly affected our variable interest rates under our credit facilities, combined with a one-time charge of $0.5 million for unamortized debt issuance costs related to our prior credit facilities.

*Income tax expense (benefit).* We recorded an income tax expense of $1.7 million for the nine months ended September 29, 2023, compared to a tax benefit of $5.6 million for the nine months ended September 30, 2022. The tax expense is primarily attributable to the income before income tax combined with the non-recurrence of a one-time tax benefit recognized during the same period last year related to additional energy efficiency building deductions.

*Net income (loss).* Our net income was $2.9 million for the nine months ended September 29, 2023, as compared to a net loss of $8.0 million for the nine months ended September 30, 2022. The increase in net income was primarily attributable to the increase in revenue and gross profit, partially offset by higher interest expense and income tax expense.

### Liquidity and Capital Resources

*(in thousands)*

| ​ ​ ​ ​ ​ Net cash provided by (used in): | ​ ​ ​ ​ ​ | ​ ​ Nine Months Ended September 29, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ September 30, 2022 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Operating activities |  | $24,112 |  | $4,503 |
| Investing activities | ​ | ​ (9,115) | ​ | ​ (6,894) |
| Financing activities | ​ | ​ (21,595) | ​ | ​ (12) |
| Net increase (decrease) in cash and cash equivalents | ​ | $(6,598) | ​ | $(2,403) |

#### Sources of Cash

Our primary sources of liquidity for the next 12 months and beyond are cash generated from operations, cash and cash equivalents, and borrowings under our revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”). We believe that our cash and cash equivalents, cash generated by operating activities, and available borrowings under our Revolving Credit Facility will be sufficient to finance our operating activities for at least the next 12 months.

As described in Part I, Item 1, Note 5, “*Debt Obligations”,* of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, on September 29, 2023 we and certain of our subsidiaries entered into the Credit Agreement with a syndicate of financial institutions as lenders and BMO, as administrative agent. The Credit Agreement replaced our Prior Credit Agreement, by and among the Company, the guarantors party thereto, BMO as administrative agent and lender and the lenders party thereto. As of September 29, 2023, we had a fully drawn $100 million term loan with $100.0 million outstanding (the “Term Loan”), a $50.0 million Revolving Credit Facility with no borrowed amounts and $4.1 million in letters of credit issued. In addition, as of September 29, 2023, we had $12.9 million of unrestricted cash and cash equivalents.

As of September 29, 2023, borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 8.4%. See Part I, Item 1, Note 5, “*Debt Obligations”,* of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.

#### Cash Flows from Operating Activities

Cash flows provided by operating activities were $24.1 million for the nine months ended September 29, 2023, as compared to cash flows provided by operating activities of $4.5 million for the nine months ended September 30, 2022. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for the nine months ended September 29, 2023, resulted primarily from the increase in earnings, combined with lower working capital requirements. Cash flows provided by operating activities for the nine months ended September 30, 2022, was favorably impacted by lower working capital requirements, offset by increases in operating losses primarily due to start up costs related to new contract awards.

#### Cash Flows from Investing Activities

Cash flows used in investing activities were $9.1 million for the nine months ended September 29, 2023, as compared to cash flows used in investing activities of $6.9 million for the nine months ended September 30, 2022. Cash flows used in investing activities for the nine months ended September 29, 2023 were primarily due to cash paid for the development of software and the purchase of computers and equipment. Cash flows used in investing activities for the nine months ended September 30, 2022 were primarily due to cash paid for the development of software and the purchase of computers and equipment.

#### Cash Flows from Financing Activities

Cash flows used in financing activities were $21.6 million for the nine months ended September 29, 2023, as compared to cash flows used in financing activities of $12,000 for the nine months ended September 30, 2022. Cash flows used in financing activities for the nine months ended September 29, 2023 were primarily attributable to the disbursement of $10.7 million in restricted cash for utility rebate incentives, payments of $4.0 million for contingent consideration related to prior acquisitions, combined with repayments and borrowings of $111.0 million and $105.0 million, respectively, under our term loan facility and line of credit, which resulted primarily from refinancing our Prior Credit Facility. Cash flows used in financing activities for the nine months ended September 30, 2022 consisted of payments of $10.2 million for contingent consideration related to prior acquisitions combined with repayments of $9.8 million under our term loan facility and revolving line of credit, offset by borrowings of $20.0 million under our Delayed Draw Term Loan.

Under certain utility contracts, we periodically receive cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. We act solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, we classify these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”

#### Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements or liabilities. In addition, we do not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.

### Short and Long-term Uses of Cash

#### General

Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt. From time to time, we also use cash to help fund business acquisitions. Our cash and cash equivalents are impacted by the timing of when we are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.

#### Contractual Obligations

The following table sets forth our known contractual obligations as of September 29, 2023:

*(in thousands)*

| ​ ​ Contractual Obligations ​ | ​ ​ ​ | ​ ​ ​ ​ Total | ​ ​ | ​ ​ Less than 1 Year | ​ ​ | ​ ​ ​ ​ 1 - 3 Years | ​ ​ | ​ ​ ​ ​ 3 - 5 Years | ​ ​ | ​ ​ More than 5 Years | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Debt (1) | ​ | $99,381 | ​ | $7,995 | ​ | $91,386 | ​ | $— | ​ | $— | ​ |
| Interest payments on debt outstanding (2) | ​ | ​ 21,939 | ​ | ​ 8,040 | ​ | ​ 13,899 | ​ | ​ — | ​ | ​ — | ​ |
| Operating leases | ​ | 14,558 | ​ | 4,729 | ​ | 6,976 | ​ | 2,120 | ​ | 733 | ​ |
| Finance leases | ​ | 2,415 | ​ | 1,166 | ​ | 1,071 | ​ | 169 | ​ | 9 | ​ |
| Total contractual cash obligations | ​ | $138,293 | ​ | $21,930 | ​ | $113,332 | ​ | $2,289 | ​ | $742 | ​ |

(1) Debt includes $100.0 million outstanding on our Term Loan, net of issuance costs, and no borrowed amounts outstanding on our Revolving Credit Facility as of September 29, 2023. We have assumed no future borrowings or repayments (other than at maturity) for purposes of this table. Our Term Loan is scheduled to mature on September 29, 2026.

(2) Borrowings under our Term Loan and Revolving Credit Facility bear interest at a variable rate. Future interest payments on our Credit Facility are estimated using floating rates in effect as of September 29, 2023.

As of September 29, 2023, we did not have any remaining contingent consideration payable related to any prior acquisitions. In addition, as of September 29, 2023, we did not have any arrangements involving the potential incurrence of future contingent consideration.

#### Outstanding Indebtedness

See Part I, Item 1, Note 5, “*Debt Obligations”*, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.

### Impact of Inflation

Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation.

While immaterial to our results of operations and financial condition, we experienced higher cost of materials and delays in our supply chain for equipment during fiscal year 2022, and we expect these higher costs and delays in our supply chain to persist through fiscal year 2023. The prices of finished products from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs, price escalation, raw material costs, and other factors that impact the cost of finished goods due to the imprecise nature of the estimates required.

We are often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment, and subcontracts on our projects, as well as, when appropriate, including cost escalation factors into our proposals. Despite our best mitigation efforts, significant price increases in equipment and disruptions to our supply chain could materially impact our results of operations and financial condition. In addition, inflationary pressures, including expectations of future inflation, may impact the customers of our utility clients, which may lead to delayed or deferred decisions regarding expenditures to improve energy efficiency, and therefore potentially impact our future revenues.

### Components of Revenue and Expense

#### Contract Revenue

We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of September 29, 2023, 21% of our contracts are time-and-materials contracts, 39% are unit-based contracts, and 40% are fixed price contracts, compared to 20% are time-and-materials contracts, 44% are unit-based contracts, and 36% are fixed price contracts, as of September 30, 2022.

Some of these contracts include maximum contract prices, but contract maximums are often adjusted to reflect the level of effort to achieve client objectives and thus the majority of these contracts are not expected to exceed the maximum. Contract revenue on our fixed price contracts is determined on the percentage of completion method based generally on the ratio of direct costs incurred to date to estimated total direct costs at completion. Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.

Adjustments to contract cost estimates are made in the periods in which the facts requiring such revisions become known. When the revised estimate indicates a loss, such loss is recognized in the current period in its entirety. Claims and change orders that have not been finalized are evaluated to determine whether or not a change has occurred in the enforceable rights and obligations of the original contract. If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly. Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the assessment above of whether or not a contract modification has occurred. Estimated profit for un-priced change orders is recognized only if collection is probable.

Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability on that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause. While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with Los Angeles Department of Water and Power and Duke Energy Corp., may have a material effect on our consolidated operations.

Some of our contracts include certain performance guarantees, such as a guaranteed energy saving quantity. Such guarantees are generally measured upon completion of a project. In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period. We have not experienced any significant costs under such guarantees.

#### Direct Costs of Contract Revenue

Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects. Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects. Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue.

Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs. We expense direct costs of contract revenue when incurred.

#### General and Administrative Expenses

G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs. We expense general and administrative costs when incurred.

### Critical Accounting Policies

We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). To prepare these financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses in the reporting period. Our actual results may differ from these estimates. We have adopted accounting policies and practices that are generally accepted in the industry in which we operate.

There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for our fiscal year ended December 30, 2022. Please refer to Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 30, 2022 for a discussion of our critical accounting policies and estimates.

### Recent Accounting Standards

For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part I, Item 1, Note 2, “*Recent Accounting Pronouncements”*, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

## Market risk

As filed, 3,354 characters.

#### Interest Rate Risk

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market risk sensitive financial instruments, including long-term debt.

As of September 29, 2023, we had cash and cash equivalents of $12.9 million. This amount represents cash on hand in business checking accounts with BMO Bank, N.A. We do not engage in trading activities and do not participate in foreign currency transactions.

We are subject to interest rate risk in connection with our Term Loan and borrowings, if any, under our Revolving Credit Facility, each of which bears interest at variable rates. As of September 29, 2023, $100.0 million was outstanding under our Term Loan, and we had no borrowed amounts outstanding and $4.1 million in letters of credit were issued under our Revolving Credit Facility. Each of our Term Loan and Revolving Credit Facility mature as of September 29, 2026 and are governed by our Credit Agreement.

Pursuant to the Credit Agreement, (as described in Part I, Item 1, Note 5, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q), borrowings under the Credit Agreement bear interest at either a Base Rate (as defined in the Credit Agreement) or the adjusted Secured Overnight Financing Rate (“SOFR”), at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranges from 0.75% to 2.00% with respect to Base Rate borrowings and 1.75% to 3.00% with respect to SOFR borrowings, depending on the Company’s Total Net Leverage Ratio (as defined in the Credit Agreement); provided, that SOFR and the Base Rate cannot be less than 0.00%, with the specific pricing reset on each date on which the Administrative Agent receives the required financial statements under the Credit Agreement for the fiscal quarter then ended. The Company must also pay a commitment fee for the unused portion of the Revolving Credit Facility, which ranges from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which range from 1.3125% to 2.25% per annum, in each case, depending on the Company’s Total Net Leverage Ratio, as well as customary fronting fees payable to BMO as letter of credit issuer. Based upon the amount of our outstanding indebtedness as of September 29, 2023, a one percentage point increase in the effective interest rate would change our annual interest expense by approximately $1.0 million in fiscal year 2023.

The Term Loan will amortize quarterly in an amount equal to (i) 7.5% per annum for the first year ending after the Closing Date and (ii) 10.0% per annum for the second and third years ending after the Closing Date, with a final payment of all then remaining principal and interest due on the maturity date of September 29, 2026. The amounts outstanding under the Credit Facilities may be prepaid in whole or in part at any time without penalty (other than customary breakage costs).

## Controls and procedures

As filed, 1,678 characters.

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15-d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, Thomas D. Brisbin, and our Chief Financial Officer, Creighton K. Early, as appropriate to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 29, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, as of September 29, 2023.

No change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 166 characters.

There are no material changes to the risk factors set forth in Part I, Item 1A, *Risk Factors* in our Annual Report on Form 10-K for the year ended December 30, 2022.

Filed Nov 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-017486. Last ingested by Listed: Oct 24, 2026, 15:12 ET. No prices; not investment advice.