v3.26.3
Acquisitions
 9 Months Ended
Sep. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
1901
On September 1, 2026 (the “1901 Effective Date”), the Company, through LFS, acquired all of the outstanding equity interests of 1901 pursuant to a Purchase Agreement with the former owners of 1901 (the “1901 Purchase Agreement”). The base purchase price was $63.0 million, subject to customary closing and post-closing adjustments, including adjustments related to working capital. After giving effect to closing adjustments and cash acquired, net cash consideration paid at closing was approximately $66.0 million. Approximately $4.2 million of the purchase price was deposited into an escrow account to secure certain indemnification obligations of the former owners. In addition, the Company recorded an estimated working capital adjustment receivable of $3.3 million representing management's current estimate of the amount recoverable pursuant to the post-closing adjustment provisions of the purchase agreement. The final settlement amount remains subject to review and determination in accordance with the terms of the purchase agreement. The acquisition was funded through a combination of cash on hand and borrowings under the Company's revolving credit facility. Upon closing, 1901 became a wholly owned indirect subsidiary of the Company.
1901 is a Madison, Wisconsin-based union MEP contractor providing mechanical, electrical, plumbing, controls, design-build, construction, fabrication, service, maintenance, and underground utility solutions throughout Wisconsin and the Midwest. The acquisition expands the Company’s footprint in the Midwest, strengthens its MEPC capabilities and increases its presence across market verticals, including higher education, healthcare, and cultural facilities, while creating additional opportunities in data centers, advanced manufacturing, life sciences, and technology.
The acquisition also includes contingent consideration of up to $6.0 million, payable in cash in two tranches of $3.0 million each based on the achievement of specified gross profit targets during the two-year period following the 1901 Effective Date, as set forth in the 1901 Purchase Agreement.
The 1901 Transaction was accounted for as a business combination using the acquisition method of accounting. As a result of the acquisition, the Company recognized preliminary goodwill of $14.3 million, which was allocated between the Company's ODR and GCR segments and is expected to be deductible for income tax purposes. The goodwill recognized is primarily attributable to expected synergies, future growth opportunities and the assembled workforce of the acquired business.
The fair value estimates of the assets acquired and liabilities assumed, as well as the Company's estimates and assumptions, are preliminary and subject to change as additional information becomes available during the measurement period. Measurement period adjustments are recorded as if they had been recognized as of the acquisition date. The effect of changes that do not qualify as measurement period adjustments are recognized in earnings in the period identified.
The following table summarizes the purchase consideration and the estimated fair values of assets acquired and liabilities assumed as of the 1901 Effective Date, with any excess of the purchase consideration over the estimated fair value of the net assets acquired recorded as goodwill.
(in thousands)Purchase Price Allocation
Consideration:
Cash$67,521 
Estimated working capital adjustment(3,298)
Earnout provision4,751 
Total Consideration68,974 
Fair value of assets acquired:
Cash and cash equivalents1,543 
Accounts receivable40,348 
Contract assets3,662 
Other current assets1,243 
Property and equipment8,674 
Operating lease right-of-use assets1,120 
Intangible assets31,500 
Amount attributable to assets acquired88,090 
Fair value of liabilities assumed:
Current portion of long-term debt – finance leases1,072 
Accounts payable, including retainage13,810 
Current operating lease liabilities464 
Accrued expenses and other current liabilities7,181 
Contract liabilities7,650 
Long-term debt – finance leases2,618 
Long-term operating lease liabilities655 
Amount attributable to liabilities assumed33,450 
Goodwill$14,334 
As of September 30, 2026, the preliminary purchase price allocation has not been finalized with respect to the valuation of identifiable intangible assets, the fair value of certain tangible assets acquired and liabilities assumed, the final working capital adjustment, goodwill and income tax-related matters. A final determination of the fair values of the assets acquired and liabilities assumed could differ from the preliminary purchase price allocation. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the 1901 Effective Date.
For working capital items, including cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities, the carrying value was assumed to approximate fair value due to the short-term nature of these instruments. There was no difference between the contractual value and fair value of the accounts receivable acquired. Contract assets and contract liabilities were recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, as if the Company had originated the related contracts.
As part of the preliminary purchase price allocation, the Company identified certain definite-lived intangible assets associated with customer relationships, acquired backlog and trade names and trademarks. The fair value of customer relationships and acquired backlog was determined using the multi-period excess earnings method under the income approach. The multi-period excess earnings method is a variation of the discounted cash flow method that isolates the cash flows attributable to a specific intangible asset and measures fair value by discounting those cash flows to present value.
The fair value of trade names and trademarks was determined using the relief-from-royalty method. This method requires identifying the future revenue expected to be generated by the asset, applying an appropriate royalty rate and discounting the resulting royalty savings to present value as of the acquisition date. The royalty rate used in the valuation was based on market rates for similar categories of assets.
The fair value of the non-compete agreements was determined using the with-or-without method under the income approach. This method measures the present value of the difference between projected cash flows assuming the non-compete agreements
are in place and those assuming the agreements are not in place, reflecting the potential impact of competition from the individuals subject to the agreements.
Significant estimates and assumptions used in determining the fair value of the identifiable intangible assets include projected revenues, profitability, customer attrition rates and discount rates, which represent Level 3 inputs.
The Company amortizes acquired finite-lived intangible assets over their estimated useful lives in a manner that reflects the expected consumption of their economic benefits. When this pattern cannot be reliably determined, the Company uses the straight-line method. The estimated amortization expense for the remainder of 2026 is approximately $2.2 million, $7.2 million for 2027, $2.3 million for 2028, and $2.1 million for each of the following three years.
Intangible assets, net as of September 30, 2026 are detailed below.
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Intangible AssetsWeighted Average Useful Life (Years)
Trade name and trademarks$1,300$(68)$1,2321.4
Customer relationships23,200(163)23,03711.7
Backlog6,200(477)5,7230.9
Non-compete agreements 800(9)7917.2
Total$31,500$(717)$30,7839.0
In addition, in connection with the 1901 Transaction, the Company entered into certain retention-related bonus arrangements with key employees of 1901. These arrangements are designed to promote continued employment and support integration efforts following the acquisition. Retention-related compensation is recognized as expense ratably over the service period, which runs through August 2028, and is contingent on continued employment. Although funded from amounts withheld from the seller’s proceeds under the purchase agreement, these arrangements are accounted for separately from the acquisition as post-combination compensation expense and are excluded from consideration transferred under ASC 805, Business Combinations. Related expenses are recognized within acquisition-related retention expense and contingent consideration in the Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2026, the Company recognized $0.1 million in retention-related expenses associated with the 1901 Transaction.
CYMCOR
On August 4, 2026 (the "CYMCOR Effective Date"), the Company, through LFS, acquired all of the outstanding equity interests of CYMCOR pursuant to a Purchase Agreement with the former owners of CYMCOR (the "CYMCOR Purchase Agreement"). The base purchase price was $30.0 million, subject to customary closing and post-closing adjustments, including adjustments related to working capital. After giving effect to closing adjustments and cash acquired, net cash consideration paid at closing was approximately $29.9 million. Approximately $0.2 million of the purchase price was deposited into an escrow account to secure certain indemnification obligations of the former owners. In addition, the Company recorded an estimated working capital adjustment payable of less than $0.1 million representing management's current estimate of the amount payable pursuant to the post-closing adjustment provisions of the purchase agreement. The final settlement amount remains subject to review and determination in accordance with the terms of the purchase agreement. The acquisition was funded through a combination of cash on hand and borrowings under the Company's revolving credit facility. Upon closing, CYMCOR became a wholly owned indirect subsidiary of the Company.
CYMCOR is a professional services firm specializing in program management, commissioning oversight, and strategic consulting for hyperscale, colocation, enterprise, and mission-critical data center clients. CYMCOR partners directly with owners to plan, coordinate, and deliver complex projects throughout the facility lifecycle, building long-term relationships through a highly technical, service-oriented approach. The acquisition expands the Company’s professional services platform and is intended to strengthen the Company’s position within the rapidly growing data center market.
The CYMCOR Transaction was accounted for as a business combination using the acquisition method of accounting. As a result of the acquisition, the Company recognized preliminary goodwill of approximately $14.2 million, which was fully allocated to the Company's ODR segment and is expected to be deductible for income tax purposes. The goodwill recognized is primarily attributable to future growth opportunities, expected synergies and the assembled workforce of the acquired business.
The fair value estimates of the assets acquired and liabilities assumed, as well as the Company's estimates and assumptions, are preliminary and subject to change as additional information becomes available during the measurement period. Measurement
period adjustments are recorded as if they had been recognized as of the acquisition date. The effect of changes that do not qualify as measurement period adjustments are recognized in earnings in the period identified.
The following table summarizes the purchase consideration and the estimated fair values of assets acquired and liabilities assumed as of the CYMCOR Effective Date, with any excess of the purchase consideration over the estimated fair value of the net assets acquired recorded as goodwill.
(in thousands)Purchase Price Allocation
Consideration:
Cash$32,403 
Estimated working capital adjustment22 
Total Consideration32,425 
Fair value of assets acquired:
Cash and cash equivalents2,539 
Accounts receivable858 
Contract assets201 
Other current assets10 
Property and equipment49 
Operating lease right-of-use assets630 
Intangible assets15,000 
Amount attributable to assets acquired19,287 
Fair value of liabilities assumed:
Accounts payable, including retainage78 
Current operating lease liabilities88 
Accrued expenses and other current liabilities86 
Contract liabilities261 
Long-term operating lease liabilities542 
Amount attributable to liabilities assumed1,055 
Goodwill$14,193 
As of September 30, 2026, the preliminary purchase price allocation has not been finalized with respect to the valuation of identifiable intangible assets, the fair value of certain tangible assets acquired and liabilities assumed, the final working capital adjustment, goodwill and income tax-related matters. A final determination of the fair values of the assets acquired and liabilities assumed could differ from the preliminary purchase price allocation. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the CYMCOR Effective Date.
For working capital items, including cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities, the carrying value was assumed to approximate fair value due to the short-term nature of these instruments. There was no difference between the contractual value and fair value of the accounts receivable acquired. Contract assets and contract liabilities were recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, as if the Company had originated the related contracts.
As part of the preliminary purchase price allocation, the Company identified certain definite-lived intangible assets associated with customer relationships, acquired backlog, trade names and trademarks, internally developed technology and non-compete agreements.
The fair value of customer relationships and acquired backlog was determined using the multi-period excess earnings method under the income approach. The multi-period excess earnings method is a variation of the discounted cash flow method that isolates the cash flows attributable to a specific intangible asset and measures fair value by discounting those cash flows to present value.
The fair value of trade names and trademarks and internally developed technology was determined using the relief-from-royalty method. This method requires identifying the future revenue expected to be generated by the respective asset, applying an appropriate royalty rate and discounting the resulting royalty savings to present value as of the acquisition date. The royalty rate used in the valuation was based on market rates for similar categories of assets.
The fair value of the non-compete agreements was determined using the with-or-without method under the income approach. This method measures the present value of the difference between projected cash flows assuming the non-compete agreements are in place and those assuming the agreements are not in place, reflecting the potential impact of competition from the individuals subject to the agreements.
Significant estimates and assumptions used in determining the fair value of the identifiable intangible assets include projected revenues, profitability, customer attrition rates and discount rates, which represent Level 3 inputs.
The Company amortizes acquired finite-lived intangible assets over their estimated useful lives in a manner that reflects the expected consumption of their economic benefits. When this pattern cannot be reliably determined, the Company uses the straight-line method. The estimated amortization expense for the remainder of 2026 is approximately $0.8 million, $3.2 million for 2027, $1.5 million for each of 2028 and 2029,, $1.4 million for 2030, and $1.3 million for 2031.
Intangible assets, net as of September 30, 2026 are detailed below.
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Intangible AssetsWeighted Average Useful Life (Years)
Trade name and trademarks$100$(11)$891.3
Customer relationships11,300(202)11,0989.1
Backlog2,300(288)2,0121.1
Developed technology400(18)3823.5
Non-compete agreements900(37)8635.2
Total$15,000$(556)$14,4447.5
In connection with the CYMCOR Transaction, the Company entered into certain retention-related bonus arrangements with key employees of CYMCOR. These arrangements are designed to promote continued employment and support integration efforts following the acquisition. Retention-related compensation is recognized as expense ratably over the service period, which primarily runs through August 4, 2028, and is contingent on continued employment. The retention-related bonus arrangements are separate from, and not part of, the purchase price. Accordingly, these amounts were not included in the determination of purchase price or the allocation of purchase consideration under ASC 805, Business Combinations. Related expenses are recognized within acquisition-related retention expense and contingent consideration in the Company's Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2026, the Company recognized $0.2 million in retention-related expenses associated with the CYMCOR Transaction.
Pioneer Power
On July 1, 2025 (the "Pioneer Power Effective Date"), the Company, through LFS, acquired all the outstanding equity interests of Pioneer Power (the “Pioneer Power Transaction”) for net cash consideration of $65.7 million, after giving effect to cash acquired as part of the transaction. The acquisition was funded through a combination of cash on hand and borrowings under the Company’s revolving credit facility. Approximately $4.1 million of the cash consideration was initially held in escrow for indemnification purposes, a portion of which has subsequently been released. Pioneer Power is a provider of industrial and institutional mechanical solutions serving healthcare, food, power/utility, oil refining and other select markets in the greater Twin Cities region of Minnesota and upper Midwest regions. The acquisition further expanded the Company’s footprint into new geographic markets in the upper Midwest regions. As a result of the Pioneer Power Transaction, Pioneer Power became a wholly-owned indirect subsidiary of the Company.
The Pioneer Power Transaction was accounted for as a business combination using the acquisition method of accounting. As a result of the acquisition, the Company recognized goodwill of $39.5 million, which was allocated between the Company’s ODR and GCR segments and is expected to be fully deductible for income tax purposes. The goodwill recognized is primarily attributable to anticipated future earnings of the acquired business.
During the measurement period, the Company recorded measurement period adjustments related to the Pioneer Power Transaction as additional information became available regarding the facts and circumstances that existed as of the acquisition date. The Company finalized the purchase price allocation during the three months ended June 30, 2026, and the measurement
period expired on June 30, 2026. The following table presents the final purchase price allocation, including cumulative measurement period adjustments recorded through June 30, 2026. Any excess of the purchase price over the fair value of the identifiable net assets acquired was recorded as goodwill.
(in thousands)Purchase Price Allocation
Cumulative Measurement Period Adjustments(1)
Adjusted Purchase Price Allocation
Consideration:
Cash$66,612 $— $66,612 
Total Consideration66,612 — 66,612 
Fair value of assets acquired:
Cash and cash equivalents961 — 961 
Accounts receivable18,416 — 18,416 
Contract assets4,176 920 5,096 
Other current assets58 — 58 
Property and equipment6,291 — 6,291 
Intangible assets16,200 — 16,200 
Amount attributable to assets acquired46,102 920 47,022 
Fair value of liabilities assumed:
Accounts payable, including retainage8,071 38 8,109 
Accrued expenses and other current liabilities1,527 (150)1,377 
Contract liabilities6,506 3,931 10,437 
Amount attributable to liabilities assumed16,104 3,819 19,923 
Goodwill$36,614 $2,899 $39,513 
(1)     The cumulative measurement period adjustments primarily related to refinements of acquired working capital balances, including accounts payable, accrued expenses and other current liabilities, and contract assets and contract liabilities, based on additional information regarding facts and circumstances that existed as of the acquisition date. The net effect of these adjustments was recorded as a corresponding adjustment to goodwill. Certain contract liability adjustments may be subject to recovery. As of September 30, 2026, no receivable has been recognized in connection with such potential recoveries. Any future amounts recovered will not result in adjustments to the final purchase price allocation.