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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Selected Quarterly Financial Data (Unaudited)

Schedule of quarterly financial information

Quarterly financial information for the years ended December 31, 2019 and 2018 is summarized as follows (in thousands, except per share data):


	2019
	Q1		Q2		Q3		Q4
Revenue	$	538,473	$	650,302	$	706,918	$	719,584
Gross profit (1)		106,665		120,016		142,702		132,560
Net income		19,866		24,173		36,233		34,052
INCOME PER SHARE:
Basic	$	0.54	$	0.65	$	0.98	$	0.93
Diluted	$	0.53	$	0.65	$	0.98	$	0.92


	2018
	Q1		Q2		Q3		Q4
Revenue	$	464,941	$	535,043	$	594,536	$	588,359
Gross profit		89,053		111,183		127,868		118,175
Net income		16,659		32,547		38,541		25,156
INCOME PER SHARE:
Basic	$	0.45	$	0.87	$	1.03	$	0.68
Diluted	$	0.44	$	0.87	$	1.02	$	0.67

(1)In the fourth quarter of 2019, we recorded a $4.8 million gain due to insurance proceeds we received in the fourth quarter related to the ransomware incident that occurred in April 2019.

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 50,788	$ 45,620
Billed accounts receivable, less allowance for doubtful accounts of $6,907 and $5,898, respectively	619,037	481,366
Unbilled accounts receivable	55,542	37,180
Other receivables	37,632	16,361
Inventories	10,053	12,416
Prepaid expenses and other	14,396	6,544
Costs and estimated earnings in excess of billings	2,736	10,213
Total current assets	790,184	609,700
PROPERTY AND EQUIPMENT, NET	109,796	99,618
LEASE RIGHT-OF-USE ASSET	84,073
GOODWILL	332,447	235,182
IDENTIFIABLE INTANGIBLE ASSETS, NET	159,974	95,275
DEFERRED TAX ASSETS	21,923	17,634
OTHER NONCURRENT ASSETS	6,615	5,155
Total assets	1,505,012	1,062,564
CURRENT LIABILITIES:
Current maturities of long-term debt	20,817	3,279
Accounts payable	196,195	176,167
Accrued compensation and benefits	102,891	87,388
Billings in excess of costs and estimated earnings	166,918	130,986
Accrued self-insurance	39,546	36,386
Other current liabilities	81,630	32,852
Total current liabilities	607,997	467,058
LONG-TERM DEBT, NET	205,318	73,639
LEASE LIABILITIES	72,697
DEFERRED TAX LIABILITIES	1,425	1,387
OTHER LONG-TERM LIABILITIES	32,271	22,433
Total liabilities	919,708	564,517
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding
Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively	411	411
Treasury stock, at cost, 4,465,448 and 4,229,653 shares, respectively	(103,960)	(87,747)
Additional paid-in capital	320,168	316,479
Retained earnings	368,685	268,904
Total stockholders' equity	585,304	498,047
Total liabilities and stockholders' equity	$ 1,505,012	$ 1,062,564

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Total
BALANCE at Dec. 31, 2016	$ 411	$ (57,387)	$ 309,625	$ 123,984	$ 376,633
BALANCE (in shares) at Dec. 31, 2016	41,123,365
BALANCE (in shares) at Dec. 31, 2016		(3,914,251)
Increase (Decrease) in Stockholders' Equity
Net income				55,272	55,272
Issuance of Stock:
Issuance of shares for options exercised		$ 2,257	(205)		2,052
Issuance of shares for options exercised (in shares)		145,746
Issuance of restricted stock & performance stock		$ 2,037	(421)		1,616
Issuance of restricted stock & performance stock (in shares)		134,646
Shares received in lieu of tax withholding payment on vested restricted stock		$ (1,419)			(1,419)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(39,335)
Stock-based compensation			3,785		3,785
Dividends				(10,987)	(10,987)
Share repurchase		$ (9,007)			(9,007)
Share repurchase (in shares)		(263,097)
BALANCE at Dec. 31, 2017	$ 411	$ (63,519)	312,784	168,269	417,945
BALANCE (in shares) at Dec. 31, 2017	41,123,365
BALANCE (in shares) at Dec. 31, 2017		(3,936,291)
Increase (Decrease) in Stockholders' Equity
Net income				112,903	112,903
Issuance of Stock:
Issuance of shares for options exercised		$ 3,618	(513)		3,105
Issuance of shares for options exercised (in shares)		206,875
Issuance of restricted stock & performance stock		$ 2,227	(4)		2,223
Issuance of restricted stock & performance stock (in shares)		129,569
Shares received in lieu of tax withholding payment on vested restricted stock		$ (1,540)			(1,540)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(36,967)
Stock-based compensation			4,212		4,212
Dividends				(12,268)	(12,268)
Share repurchase		$ (28,533)			(28,533)
Share repurchase (in shares)		(592,839)
BALANCE at Dec. 31, 2018	$ 411	$ (87,747)	316,479	268,904	$ 498,047
BALANCE (in shares) at Dec. 31, 2018	41,123,365				41,123,365
BALANCE (in shares) at Dec. 31, 2018		(4,229,653)			4,229,653
Increase (Decrease) in Stockholders' Equity
Net income				114,324	$ 114,324
Issuance of Stock:
Issuance of shares for options exercised		$ 2,532	(182)		2,350
Issuance of shares for options exercised (in shares)		114,125
Issuance of restricted stock & performance stock		$ 2,303	(297)		2,006
Issuance of restricted stock & performance stock (in shares)		107,606
Shares received in lieu of tax withholding payment on vested restricted stock		$ (1,498)			(1,498)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(28,586)
Stock-based compensation			4,168		4,168
Dividends				(14,543)	(14,543)
Share repurchase		$ (19,550)			(19,550)
Share repurchase (in shares)		(428,940)
BALANCE at Dec. 31, 2019	$ 411	$ (103,960)	$ 320,168	$ 368,685	$ 585,304
BALANCE (in shares) at Dec. 31, 2019	41,123,365				41,123,365
BALANCE (in shares) at Dec. 31, 2019		(4,465,448)			4,465,448

Acquisitions - Pro Forma (Details) - USD ($) $ in Thousands	12 Months Ended
Acquisitions - Pro Forma (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Revenue	$ 2,703,638	$ 2,574,206
Pre-tax income	$ 152,136	143,473
Walker
Business Acquisition [Line Items]
Compensation expenses for former owners		$ 9,600

Stock-Based Compensation - Stock Option Plan Activity (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2019 $ / shares shares
$11.21 - $15.00
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	$ 11.21
Exercise price, high end of range (in dollars per share)	15.00
$15.01 - $35.00
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	15.01
Exercise price, high end of range (in dollars per share)	35.00
$35.01 - $42.50
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	35.01
Exercise price, high end of range (in dollars per share)	42.50
$11.21 - $42.50
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	11.21
Exercise price, high end of range (in dollars per share)	$ 42.50
Stock Options \| $11.21 - $15.00
Options Outstanding
Number of Shares \| shares	45
Weighted-Average Remaining Contractual Life	2 years 10 months 24 days
Weighted-Average Exercise Price (in dollars per share)	$ 13.60
Options Exercisable
Number of Shares \| shares	45
Weighted-Average Exercise Price (in dollars per share)	$ 13.60
Stock Options \| $15.01 - $35.00
Options Outstanding
Number of Shares \| shares	200
Weighted-Average Remaining Contractual Life	5 years 1 month 6 days
Weighted-Average Exercise Price (in dollars per share)	$ 21.47
Options Exercisable
Number of Shares \| shares	200
Weighted-Average Exercise Price (in dollars per share)	$ 21.47
Stock Options \| $35.01 - $42.50
Options Outstanding
Number of Shares \| shares	137
Weighted-Average Remaining Contractual Life	7 years 8 months 12 days
Weighted-Average Exercise Price (in dollars per share)	$ 39.67
Options Exercisable
Number of Shares \| shares	56
Weighted-Average Exercise Price (in dollars per share)	$ 38.51
Stock Options \| $11.21 - $42.50
Options Outstanding
Number of Shares \| shares	382
Weighted-Average Remaining Contractual Life	5 years 9 months 18 days
Weighted-Average Exercise Price (in dollars per share)	$ 27.06
Options Exercisable
Number of Shares \| shares	301
Weighted-Average Exercise Price (in dollars per share)	$ 23.45

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling interest. All significant intercompany accounts and transactions have been eliminated. Certain amounts in prior periods may have been reclassified to conform to the current period presentation. The effects of the reclassifications were not material to the consolidated financial statements.

Use of Estimates

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

Cash Flow Information

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash paid (in thousands) for:


	Year Ended December 31,
	2019		2018		2017
Interest	$	8,817	$	3,743	$	2,832
Income taxes	$	45,288	$	33,401	$	38,144

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases (Topic 842).” The standard requires substantially all leases (with the exception of leases with a term of one year or less) to be recorded on the Balance Sheet using a method referred to as the right-of-use (“ROU”) asset approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those years. Full retrospective application is prohibited. We adopted ASU No. 2016-02, “Leases (Topic 842)”, on January 1, 2019, using

the transition method allowed by ASU No. 2018-11, “Leases (Topic 842) Targeted Improvements” in which lessees apply the new lease standard on the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted the practical expedient allowing us to not include leases with an initial term of 12 months or less on the Balance Sheet. Furthermore, we elected to apply the practical expedient allowing an entity to forgo reassessing (1) whether expired or existing contracts contain a lease, (2) classification of expired or existing leases, and (3) whether capitalized costs associated with expired or existing leases should be classified as “initial direct costs” under Topic 842. The adoption of ASU 2016-02 did not have a significant impact to our Statement of Operations or Cash Flows. The adoption of ASU 2016-02 resulted in the recording of right-of-use asset and lease liabilities of $75.9 million on our Balance Sheet as of January 1, 2019 but did not result in a cumulative-effect adjustment to retained earnings.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The standard requires companies to consider historical experiences, current market conditions and reasonable and supportable forecasts in the measurement of expected credit losses. The standard will require us to accrue higher credit losses on financial assets compared to the current guidance on various items, such as contract assets and current receivables. We are still completing our evaluation of the impact of this authoritative guidance on our consolidated financial statements, but expect that it will increase our allowances for credit losses upon adoption. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. Early adoption is permitted.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement.” This standard removes certain disclosure requirements including the valuation processes for Level 3 fair value measurements, the policy for timing of transfers between levels and the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The standard requires certain additional disclosures for public entities, including disclosure of the changes in unrealized gains and losses included in Other Comprehensive Income for Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. Certain amendments, including the amendment on changes in unrealized gains and losses and the range and weighted average of significant unobservable inputs, should be applied prospectively while other amendments should be applied retrospectively to all periods presented upon their effective date. We are currently evaluating the potential impact of this authoritative guidance on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within that year. Early adoption is permitted. We are currently evaluating the potential impact of this authoritative guidance on our consolidated financial statements.

Revenue Recognition

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

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

For fixed price agreements, we use the percentage of completion method of accounting under which contract revenue recognizable at any time during the life of a contract is determined by multiplying expected total contract

revenue by the percentage of contract costs incurred at any time to total estimated contract costs. More specifically, as part of the negotiation and bidding process to obtain installation contracts, we estimate our contract costs, which include all direct materials, labor and subcontract costs and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. These contract costs are included in our results of operations under the caption “Cost of Services.” Then, as we perform under those contracts, we measure costs incurred, compare them to total estimated costs to complete the contract and recognize a corresponding proportion of contract revenue. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed. Non‑labor project costs consist of purchased equipment, prefabricated materials and other materials. Purchased equipment on our projects is substantially produced to job specifications and is a value-added element to our work. The costs are considered to be incurred when title is transferred to us, which typically is upon delivery to the work site. Prefabricated materials, such as ductwork and piping, are generally performed at our shops and recognized as contract costs when fabricated for the unique specifications of the job. Other materials costs are generally recorded when delivered to the work site. This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments.

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

Selling, marketing and estimation costs incurred in relation to selling contracts are expensed as incurred. On rare occasions, we may incur significant expenses related to selling a contract that we only incurred because we sold that contract. If this occurs, we capitalize that cost and amortize it on a percentage of completion basis over the life of the contract. We do not currently have any capitalized selling, marketing, or estimation costs on our Balance Sheet and did not incur any impairment loss in the current year.

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

Project contracts typically provide for a schedule of billings or invoices to the customer based on our job-to-date percentage of completion of specific tasks inherent in the fulfillment of our performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in our Statement of Operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in our Balance Sheet under the caption “Costs and estimated earnings in excess of billings.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract are reflected as a current liability in our Balance Sheet under the caption “Billings in excess of costs and estimated earnings.”

Contracts in progress are as follows (in thousands):


	December 31,
	2019		2018
Costs incurred on contracts in progress	$	2,518,581	$	1,574,460
Estimated earnings, net of losses		405,891		300,514
Less—Billings to date		(3,033,112)		(1,958,567)
Less—Unbilled accounts receivable		(55,542)		(37,180)
	$	(164,182)	$	(120,773)

Costs and estimated earnings in excess of billings	$	2,736	$	10,213
Billings in excess of costs and estimated earnings		(166,918)		(130,986)
	$	(164,182)	$	(120,773)

Accounts receivable include amounts billed to customers under retention or retainage provisions in construction contracts. Such provisions are standard in our industry and usually allow for a small portion of progress billings or the contract price to be withheld by the customer until after we have completed work on the project, typically for a period of six months. Based on our experience with similar contracts in recent years, the majority of our billings for such retention balances at each Balance Sheet date are finalized and collected within the subsequent year. Retention balances at December 31, 2019 and 2018 were $111.7 million and $80.8 million, respectively, and are included in accounts receivable.

Accounts payable at December 31, 2019 and 2018 included $15.8 million and $13.7 million of retainage under terms of contracts with subcontractors, respectively. The majority of the retention balances at each Balance Sheet date are finalized and paid within the subsequent year.

The percentage of completion method of accounting is also affected by changes in job performance, job conditions, and final contract settlements. These factors may result in revisions to estimated costs and, therefore, revenue. Such revisions are frequently based on further estimates and subjective assessments. The effects of these revisions are recognized in the period in which revisions are determined. When such revisions lead to a conclusion that a loss will be recognized on a contract, the full amount of the estimated ultimate loss is recognized in the period such conclusion is reached, regardless of the percentage of completion of the contract.

Revisions to project costs and conditions can give rise to change orders under which there is an agreement between the customer and us that the customer pays an additional or reduced contract price. Revisions can also result in claims we might make against the customer to recover project variances that have not been satisfactorily addressed through change orders with the customer. Except in certain circumstances, we do not recognize revenue or margin based on change orders or claims until they have been agreed upon with the customer. The amount of revenue associated with unapproved change orders and claims was immaterial for the year ended December 31, 2019.

Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation via additional customer payments.

We typically invoice our customers with payment terms of net due in 30 days. It is common in the construction industry for a contract to specify more lenient payment terms allowing the customer 45 to 60 days to make their payment. It is also common for the contract in the construction industry to specify that a general contractor is not required to submit payments to a subcontractor until it has received those funds from the owner or funding source. In most instances, we receive payment of our invoices between 30 to 90 days of the date of the invoice.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one performance obligation and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability (even if that single project results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. Less commonly, however, we may promise to provide distinct goods or services within a contract, in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We infrequently sell standard products with observable standalone sales. In such cases, the observable standalone sales are used to determine the standalone selling price. More frequently, we sell a customized, customer-specific solution, and, in these cases, we typically use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

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

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

In our mechanical segment, for a small portion of our business in which our services are delivered in the form of service maintenance agreements for existing systems to be repaired and maintained, as opposed to constructed, our performance obligation is to maintain the customer’s mechanical system for a specific period of time. Similar to jobs, we recognize revenue over time; however, for service maintenance agreements in which the full cost to provide services may not be known, we generally use an input method to recognize revenue, which is based on the amount of time we have provided our services out of the total time we have been contracted to perform those services.

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

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

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

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

operating income. Changes in estimates of revenue, cost of services and the related impact to operating income are recognized quarterly on a cumulative catchup basis, meaning we recognize in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. For projects in which estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

The Company typically does not incur any returns, refunds, or similar obligations after the completion of the performance obligation since any deficiencies are corrected during the course of the work or are included as a modification to revenue. The Company does offer an industry standard warranty on our work, which is most commonly for a one-year period. The vendors providing the equipment and materials are responsible for any failures in their product unless installed incorrectly. We include an estimated amount to cover estimated warranty expense in our Cost of Services and record a liability on our Balance Sheet to cover our current estimated outstanding warranty obligations.

Prior to implementing ASC 606 on January 1, 2018, our methods for recognizing revenue were very similar to our current method under ASC 606. We used the actual cost as a percent of total expected cost at completion to estimate our percentage complete on fixed price jobs, a mark-up of costs for jobs in which revenue was based on time and materials incurred and elapsed time for those service maintenance contracts in which the full cost to provide the services cannot be reasonably estimated. Furthermore, our process for allocating transaction price to performance obligations is also substantially similar to prior years when, in most cases, a contract is one performance obligation. In those cases in which a contract is determined to have more than one performance obligation, the contract price is allocated to each performance obligation based on its standalone sales price.

During the years ended December 31, 2018 and December 31, 2019, net revenue recognized from our performance obligations satisfied in previous periods was not material.

Disaggregation of Revenue

Our consolidated 2019 revenue was derived from contracts to provide service activities in the mechanical and electrical services segments we serve. Refer to Note 14 – Segment Information for additional information on our reportable segments. We disaggregate our revenue from contracts with customers by activity, customer type and contract type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the following tables (dollars in thousands):


	Year Ended December 31,
Revenue by Service Provided	2019				2018				2017
Mechanical Services	$	2,251,560	86.1	%	$	2,176,223	99.7	%	$	1,787,922	100.0	%
Electrical Services		363,717	13.9	%		6,656	0.3	%		—	—
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Type of Customer	2019				2018				2017
Industrial	$	886,668	33.9	%	$	596,557	27.3	%	$	395,362	22.1	%
Education		412,318	15.8	%		391,937	18.0	%		351,808	19.7	%
Office Buildings		348,640	13.3	%		288,090	13.2	%		248,604	13.9	%
Healthcare		358,155	13.7	%		319,958	14.7	%		224,643	12.6	%
Government		162,507	6.2	%		143,958	6.6	%		140,843	7.9	%
Retail, Restaurants and Entertainment		248,083	9.5	%		225,348	10.3	%		223,593	12.5	%
Multi-Family and Residential		104,693	4.0	%		136,075	6.2	%		116,844	6.5	%
Other		94,213	3.6	%		80,956	3.7	%		86,225	4.8	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Activity Type	2019				2018				2017
New Construction	$	1,201,122	45.9	%	$	829,978	38.0	%	$	684,687	38.3	%
Existing Building Construction		793,159	30.3	%		796,946	36.5	%		580,737	32.4	%
Service Projects		231,228	8.9	%		206,506	9.5	%		197,703	11.1	%
Service Calls, Maintenance and Monitoring		389,768	14.9	%		349,449	16.0	%		324,795	18.2	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

Accounts Receivable

Accounts Receivable include amounts from work completed in which we have billed or have an unconditional right to bill our customers. The amounts due are stated at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable.

Contract Assets and Liabilities

Contract assets include unbilled amounts typically resulting from sales under long term contracts when the cost to cost method of revenue recognition is used, revenue recognized exceeds the amount billed to the customer and right to payment is conditional, subject to completing a milestone, such as a phase of the project. Contract assets are generally classified as current.

Contract liabilities consist of advance payments and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. We classify advance payments and billings in excess of revenue recognized as current. It is very unusual for us to have advanced payments with a term of greater than one year; therefore, our contract assets and liabilities are usually all current. If we have advanced payments with a term greater than one year, the noncurrent portion of advanced payments would be included in other long-term liabilities in our consolidated Balance Sheets.

The following table presents the changes in contract assets and contract liabilities (in thousands):


	Year Ended December 31,
	2019				2018
	Contract		Contract		Contract		Contract
	Assets		Liabilities		Assets		Liabilities
Balance at beginning of period	$	10,213	$	130,986	$	30,116	$	106,005
Change due to acquisitions / disposals		6,573		31,556		2,833		8,195
Change due to conditional versus unconditional		(14,050)		—		6,244		—
Reclassified to unbilled accounts receivable		—		—		(28,980)		—
Change in timing for performance obligation to be satisfied		—		4,376		—		16,786
Balance at end of period	$	2,736	$	166,918	$	10,213	$	130,986

During the years ended December 31, 2019 and 2018, we recognized revenue of $126.7 million and $97.6 million related to our contract liabilities at January 1, 2019 and January 1, 2018, respectively.

We did not have any impairment losses recognized on our receivables or contract assets in 2019 and 2018.

Remaining Performance Obligations

Remaining construction performance obligations represent the remaining transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of December 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.60 billion. The Company expects to recognize revenue on approximately 85% of the remaining performance obligations over the next 12 months, with the remaining recognized thereafter. Our service maintenance agreements are generally one-year renewable agreements.

We have adopted the practical expedient that allows us to not include service maintenance contracts less than one year, therefore we do not report unfulfilled performance obligations for service maintenance agreements.

Leases

We lease certain facilities, vehicles and equipment under noncancelable operating leases. The most significant portion of these noncancelable operating leases are for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded on the Balance Sheet. We account for lease components separately from the non-lease components. We have certain leases with variable payments based on an index as well as some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $8.4 million in 2019. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate as of December 31, 2019 was 3.9%. We recognize lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Lease expense for the years ended December 31, 2019, 2018 and 2017 was $24.8 million, $23.4 million and $21.1 million respectively.

The lease terms generally range from three to ten years. Some leases include one or more options to renew, with renewal terms that can extend the lease term. We include the exercise of lease renewal options in the lease term when it is reasonably certain that we will exercise the option and such exercise is at our sole discretion. The weighted average remaining lease term was 8.1 years at December 31, 2019.

A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the years ended December 31, 2019, 2018 and 2017 was approximately $3.7 million, $4.8 million and $4.8 million, respectively.

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

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


	December 31, 2019
Lease right-of-use assets	$	84,073
Lease liabilities:
Other current liabilities		14,016
Long-term lease liabilities		72,697
Total lease liabilities	$	86,713

The maturities of lease liabilities as of December 31, 2019 are as follows (in thousands):


Year ending December 31—
2020	$	17,124
2021		15,096
2022		12,873
2023		10,797
2024		9,222
Thereafter		36,954
Total Lease Payments		102,066
Less—Present Value Discount		(15,353)
Present Value of Lease Liabilities	$	86,713

The following table represents future minimum rental payments under noncancelable operating leases under ASC 840 as of December 31, 2018 (in thousands):


Year ending December 31—
2019	$	13,503
2020		10,768
2021		9,449
2022		7,707
2023		6,402
Thereafter		28,328
	$	76,157

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


	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	16,895
Lease right-of-use assets obtained in exchange for lease liabilities	$	26,811

Inventories

Inventories consist of parts and supplies that we purchase and hold for use in the ordinary course of business and are stated at the lower of cost or net realizable value using the average-cost method.

Property and Equipment

Property and equipment are stated at cost, and depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over the lesser of the expected life of the lease or the estimated useful life of the asset.

Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of existing equipment, are capitalized and depreciated over the remaining useful life of the equipment. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in “Gain on sale of assets” in the Statement of Operations.

Recoverability of Goodwill and Identifiable Intangible Assets

Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred.

When the carrying value of a given reporting unit exceeds its fair value, a goodwill impairment loss is recorded for this difference, not to exceed the carrying amount of goodwill. If other reporting units have had increases in fair value, such increases may not be recorded. Accordingly, such increases may not be netted against impairments at other reporting units. The requirements for assessing whether goodwill has been impaired involve market-based information. This information, and its use in assessing goodwill, entails some degree of subjective assessment.

We perform our annual impairment testing as of October 1 and any impairment charges resulting from this process are reported in the fourth quarter. We segregate our operations into reporting units based on the degree of operating and financial independence of each unit and our related management of them. We perform our annual goodwill impairment testing at the reporting unit level. We perform a goodwill impairment review for each of our operating units, as we have determined that each of our operating units are reporting units.

In the evaluation of goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying value. If, after completing such assessment, we determine it is

more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. If we conclude otherwise, then we calculate the fair value of the reporting unit and compare the fair value with the carrying value of the reporting unit.

We estimate the fair value of the reporting unit based on a market approach and an income approach, which utilizes discounted future cash flows. Assumptions critical to the fair value estimates under the discounted cash flow model include discount rates, cash flow projections, projected long-term growth rates and the determination of terminal values. The market approach utilizes market multiples of invested capital from comparable publicly traded companies (“public company approach”). The market multiples from invested capital include revenue, book equity plus debt and earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”).

We amortize identifiable intangible assets with finite lives over their useful lives. Changes in strategy and/or market condition may result in adjustments to recorded intangible asset balances or their useful lives.

Long-Lived Assets

Long-lived assets are comprised principally of goodwill, identifiable intangible assets, property and equipment, and deferred tax assets. We periodically evaluate whether events and circumstances have occurred that indicate that the remaining balances of these assets may not be recoverable. We use estimates of future income from operations and cash flows, as well as other economic and business factors, to assess the recoverability of these assets.

Acquisitions

We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition.

Contingent Consideration—In certain acquisitions, we agree to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain predetermined profitability targets. We have recognized liabilities for these contingent obligations based on their estimated fair value at the date of acquisition with any differences between the acquisition date fair value and the ultimate settlement of the obligations being recognized in income from operations.

Contingent Assets and Liabilities—Assets and liabilities arising from contingencies are recognized at their acquisition date fair value when their respective fair values are determinable. Acquisition date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed.

Self-Insurance Liabilities

We are substantially self-insured for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims, in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Losses are estimated and accrued based upon known facts, historical trends and industry averages. Estimated losses in excess of our deductible, which have not already been paid, are included in our accrual with a corresponding receivable from our insurance carrier. Loss estimates associated with the larger and longer-developing risks—workers’ compensation, auto liability and general liability—are reviewed by a third-party actuary quarterly. Our self-insurance arrangements are further discussed in Note 11 “Commitments and Contingencies.”

Warranty Costs

We typically warrant labor for the first year after installation on new MEP systems that we build and install, and we pass through to the customer manufacturers’ warranties on equipment. We generally warrant labor for thirty days after servicing existing MEP systems. A reserve for warranty costs is estimated and recorded based upon the historical level of warranty claims and management’s estimate of future costs.

Income Taxes

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

Income taxes are provided for under the liability method, which takes into account differences between financial statement treatment and tax treatment of certain transactions. Deferred taxes are based on the difference between the financial reporting and tax basis of assets and liabilities. The deferred tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more-likely-than-not some portion or all of the deferred tax assets will not be realized.

We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. We perform this evaluation quarterly. In assessing the realizability of deferred tax assets, we must consider whether it is more-likely-than-not some portion, or all, of the deferred tax assets will not be realized. We consider all available evidence, both positive and negative, in determining whether a valuation allowance is required. Such evidence includes the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years and tax planning strategies in making this assessment, and judgment is required in considering the relative weight of negative and positive evidence.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items. We establish reserves when, despite our belief that our tax return positions are supportable, we believe that certain positions may be disallowed. When facts and circumstances change, we adjust these reserves through our provision for income taxes.

To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and are classified as a component in provision for income taxes in our Consolidated Statements of Operations.

Concentrations of Credit Risk

We provide services in a broad range of geographic regions. Our credit risk primarily consists of receivables from a variety of customers including general contractors, property owners and developers and commercial and industrial companies. We are subject to potential credit risk related to changes in business and economic factors throughout the United States within the nonresidential construction industry. However, we are entitled to payment for work performed and have certain lien rights in that work. Further, we believe that our contract acceptance, billing and collection policies are adequate to manage potential credit risk. We regularly review our accounts receivable and estimate an allowance for uncollectible amounts. We have a diverse customer base, with our top customer representing 5% of consolidated 2019 revenue.

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable, life insurance policies, notes to former owners, a revolving credit facility and a term loan. We believe that the carrying values of these instruments on the accompanying Balance Sheets approximate their fair values.

Insurance Recovery

We recorded a $4.8 million gain in the fourth quarter of 2019 due to insurance proceeds we received in the fourth quarter related to the ransomware incident that occurred in April 2019. Approximately $1.6 million of the gain was recorded as a reduction in SG&A, and the remainder was recorded as a reduction in Cost of Services expense. These proceeds related to recoverable costs that were primarily incurred prior to the fourth quarter in 2019. We do not expect any additional insurance proceeds or other recoveries related to the ransomware incident.

Commitments and Contingencies - Other and Bonds (Details) - Surety	12 Months Ended
	Dec. 31, 2019
Minimum
Surety
Percentage of business which has required bonds	15.00%
Maximum
Surety
Percentage of business which has required bonds	25.00%

Acquisitions (Details) - USD ($) $ in Thousands		3 Months Ended								9 Months Ended	12 Months Ended
Acquisitions (Details) - USD ($) $ in Thousands	Apr. 01, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Acquisitions
Revenues		$ 719,584	$ 706,918	$ 650,302	$ 538,473	$ 588,359	$ 594,536	$ 535,043	$ 464,941		$ 2,615,277	$ 2,182,879	$ 1,787,922
Consideration transferred:
Total consideration transferred											2,600	96,400	9,400
Recognized amounts of identifiable assets acquired and liabilities assumed:
Goodwill		$ 332,447				$ 235,182				$ 332,447	$ 332,447	$ 235,182	$ 200,584
Walker
Acquisitions
Revenues										$ 343,200
Consideration transferred:
Cash paid at closing	$ 178,000
Advance to former owners	20,500
Working capital adjustment	(7,809)
Notes issued to former owners	25,000
Tax equalization payment	202
Estimated fair value of contingent earn-out payments	19,500
Total consideration transferred	235,393
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	4,850
Billed and unbilled accounts receivable	92,309
Other current assets	8,225
Other long-term assets	53
Property and equipment	4,970
Goodwill	96,686
Identifiable intangible assets	90,200
Lease right-of-use asset	9,195
Accounts payable	(20,220)
Accrued compensation and benefits	(974)
Billings in excess of costs and estimated earnings	(31,553)
Other current liabilities	(11,205)
Long-term lease liabilities	(7,143)
Total assets acquired and liabilities assumed	$ 235,393
Cash flow discount rate	10.20%
Walker \| Minimum
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash flow discount rate	8.50%
Walker \| Maximum
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash flow discount rate	11.50%

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

9. Income Taxes

Provision for Income Taxes

Our provision for income taxes relating to continuing operations consists of the following (in thousands):


	December 31,
	2019		2018		2017
Current tax provision—
Federal	$	33,281	$	22,728	$	35,434
State and Puerto Rico		8,388		8,589		6,054
Total current		41,669		31,317		41,488
Deferred tax provision (benefit)—
Federal		(3,750)		4,347		5,391
State and Puerto Rico		(501)		109		(1,213)
Total deferred		(4,251)		4,456		4,178
Provision for income taxes	$	37,418	$	35,773	$	45,666

The provision for income taxes for the years ended December 31, 2019, 2018 and 2017 resulted in effective tax rates on continuing operations of 24.7%, 24.1% and 45.2%, respectively. The reasons for the differences between these effective tax rates and the federal statutory rates are as follows (in thousands):


	December 31,
	2019			2018			2017
Federal statutory rate of—		21	%		21	%		35	%
Income taxes at the federal statutory rate	$	31,866		$	31,222		$	35,328
Increases (decreases) resulting from—
Net state income taxes		6,644			7,470			2,838
Valuation allowances		(279)			(2,852)			91
Net unrecognized tax benefits		7,338			(15)			153
Nondeductible expenses		2,180			1,926			1,134
R&D tax credits		(4,569)			(2,726)			—
179D deduction		(5,126)			—			—
Net operating loss carryforwards		—			2,225			—
Stock-based compensation deductions		(714)			(1,293)			(1,320)
Domestic production activities deduction		—			—			(2,112)
Corporate tax rate reduction to 21%		—			—			9,478
Other		78			(184)			76
Provision for income taxes	$	37,418		$	35,773		$	45,666

As of December 31, 2017, we recorded provisional amounts for the impact of the Tax Cuts and Jobs Act. An expense of $9.5 million was recorded in the fourth quarter of 2017 for the remeasurement of our net deferred tax assets based on the rates at which they are expected to reverse in the future (generally 21%). At December 31, 2018, we completed our accounting for the impact of the Tax Cuts and Jobs Act, and no further adjustments were made.

Our provision for income taxes was reduced by $2.8 million in the first quarter of 2018 due to a decrease in unrecognized tax benefits from the filing of a federal income tax automatic accounting method change application.

In the third quarter of 2019, we filed an amended federal return for 2015 to claim the credit for increasing research activities (“R&D tax credits”) and recorded a $4.6 million tax benefit that was fully offset by an increase in unrecognized tax benefits. We previously filed an amended federal return for 2014 to claim R&D tax credits during 2018 and recorded a $2.7 million tax benefit that was also fully offset by an increase in unrecognized tax benefits. These tax benefits were fully offset by increases in unrecognized tax benefits due to the uncertainty of the outcome from examinations opened by the Internal Revenue Service (the “IRS”). As a result, the R&D tax credits claimed have had no impact on our effective tax rates.

During 2018, we dissolved our Puerto Rican subsidiary and thus wrote-off the remaining $2.2 million of net operating loss (“NOL”) carryforwards and related valuation allowance. The dissolution of our Puerto Rican subsidiary did not have an impact on our 2018 effective tax rate.

For the year ended December 31, 2019, our provision for income taxes was reduced by $2.2 million due to benefits from the filing, and expected filing, of amended returns to claim the energy efficient commercial buildings deduction (the “179D deduction”) allocated to us.

Deferred Tax Assets (Liabilities)

Significant components of the deferred tax assets and deferred tax liabilities as reflected on the balance sheets are as follows (in thousands):


	Year Ended
	December 31,
	2019		2018
Deferred tax assets—
Accounts receivable and allowance for doubtful accounts	$	1,660	$	1,445
Stock-based compensation		2,561		2,538
Accrued liabilities and expenses		25,569		19,449
Lease liabilities		20,873		—
Net operating loss carryforwards		2,750		3,242
Intangible assets		7,988		5,071
Other		525		550
Subtotal		61,926		32,295
Valuation allowances		(369)		(648)
Total deferred tax assets		61,557		31,647
Deferred tax liabilities—
Property and equipment		(11,286)		(10,488)
Lease right-of-use asset		(20,873)		—
Long-term contracts		(876)		(688)
Goodwill		(6,020)		(3,864)
Other		(2,004)		(360)
Total deferred tax liabilities		(41,059)		(15,400)
Net deferred tax assets	$	20,498	$	16,247

The deferred tax assets and liabilities reflected above are included in the consolidated balance sheets as follows (in thousands):


	December 31,
	2019		2018
Deferred tax assets	$	21,923	$	17,634
Deferred tax liabilities	$	1,425	$	1,387

As of December 31, 2019, we had $2.8 million of future tax benefits related to $47.0 million of available state NOL carryforwards, which expire in varying amounts between the years 2021 and 2039. Valuation allowances of $0.4 million have been recorded against certain of the state NOL carryforwards. The $2.4 million deferred tax asset for state NOL carryforwards, net of valuation allowances, reflects our conclusion that it is more-likely-than-not these assets will be realized based upon expected future earnings in certain subsidiaries.

We update our assessment of the realizability of deferred tax assets relating to state NOL carryforwards annually. A return to profitability in our subsidiaries with valuation allowances would result in a release of a portion of the valuation allowance relating to realizable deferred tax assets. A sustained period of profitability could cause a change in our judgment of any remaining deferred tax assets. If that were to occur, then it is likely that we would reverse some or all of the remaining valuation allowances.

Liabilities for Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):


	Year Ended
	December 31,
	2019		2018		2017
Balance at beginning of year	$	2,966	$	8,929	$	240
Additions based on tax positions related to current year		—		—		8,689
Additions based on tax positions related to prior years		7,473		2,726		—
Reductions for tax positions related to prior years		(240)		(8,689)		—
Reductions for settlements with tax authorities		—		—		—
Balance at end of year	$	10,199	$	2,966	$	8,929

As of December 31, 2019, 2018 and 2017, we had $10.2 million, $3.0 million and $8.9 million, respectively, of unrecognized tax benefits, which if recognized in future periods, would impact our effective tax rate. We also had accrued zero, $0.6 million and $0.7 million for potential interest and penalties related to the unrecognized tax benefits as of December 31, 2019, 2018 and 2017, respectively. We recognize potential interest and penalties related to unrecognized tax benefits in our provision for income taxes.

We believe it is reasonably possible that a decrease of up to $10.2 million in unrecognized tax benefits could occur within the next twelve months. Any decrease in our unrecognized tax benefits, due to the future recognition of those tax benefits, would affect our effective tax rate.

We are subject to taxation in the United States and various state jurisdictions. In the fourth quarter of 2017, we received a ‘no change letter’ from the IRS upon completion of its examination of the 2015 tax year. During 2019, the IRS commenced an examination of our amended federal returns for 2014 and 2015. The completion of the IRS examination could impact our results of operations and financial condition.

State income tax returns are generally subject to examination for a period of three to five years after filing the returns. However, the state impact of any federal audit adjustments and amendments remains subject to examination by various states for up to one year after formal notification to the states. We generally remain open to examination by various state tax authorities for the 2011 tax year forward. As of December 31, 2019, we did not have any state audits underway that would have a material impact on our financial position or results of operations.

Income Taxes - Loss Carryforwards and Other (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating loss carryforwards
Net deferred tax assets	$ 61,557	$ 31,647
Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties
Balance at beginning of year	2,966	8,929	$ 240
Additions based on tax positions related to current year			8,689
Additions based on tax positions related to prior years	7,473	2,726
Reductions for tax positions related to prior years	(240)	(8,689)
Reductions for settlements with tax authorities
Balance at end of year	10,199	2,966	8,929
Interest and penalties accrued	0	$ 600	$ 700
State
Operating loss carryforwards
Future tax benefits	2,800
Net operating loss carryforwards	47,000
Increase in valuation allowance	400
Net deferred tax assets	2,400
Maximum
Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties
Decrease in unrecognized tax benefits	$ 10,200

Acquisitions - Other Acquisitions (Details) $ in Millions	3 Months Ended						12 Months Ended
Acquisitions - Other Acquisitions (Details) $ in Millions	Jun. 30, 2019 item	Mar. 31, 2019 item	Sep. 30, 2018 item	Jun. 30, 2018 item	Mar. 31, 2018 item	Jun. 30, 2017 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) item
Acquisitions
Number of acquisitions \| item	1	1	2	3	2				4
Total purchase price							$ 2.6	$ 96.4	$ 9.4
Number of acquisitions reported as separate operating location \| item			1
BCH
Acquisitions
Total purchase price						$ 121.3
Amount allocated to goodwill and intangible assets for acquisitions						97.0
Purchase price paid in cash						95.4
Promissory note payable						14.3
Contingent earn-out obligation						$ 11.6

Stockholders' Equity - Incentive and Other (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	12 Months Ended			153 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019	May 31, 2017	May 31, 2012	Mar. 29, 2007
Share Repurchase Program
Share repurchase	$ 19,550	$ 28,533	$ 9,007
2012 Equity Incentive Plan
Stockholders' Equity
Number of shares authorized and reserved for issuance						5.1
Number of shares available for issuance	2.9			2.9
2017 Omnibus Incentive Plan
Stockholders' Equity
Number of shares authorized and reserved for issuance					2.9
Number of shares available for issuance	2.4			2.4
Stock Repurchase Program 2007
Share Repurchase Program
Number of shares of outstanding common stock authorized to be acquired under a stock repurchase program	9.5			9.5			1.0
Number of additional shares of outstanding common stock authorized to be acquired under a stock repurchase program	0.8			0.8
Share repurchase (in shares)	0.4			8.6
Average price (in dollars per share)	$ 45.58			$ 17.70
Repurchased carrying basis	$ 19,600			$ 19,600

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Schedule of cash paid

Cash paid (in thousands) for:


	Year Ended December 31,
	2019		2018		2017
Interest	$	8,817	$	3,743	$	2,832
Income taxes	$	45,288	$	33,401	$	38,144

Schedule of contracts in progress

Contracts in progress are as follows (in thousands):


	December 31,
	2019		2018
Costs incurred on contracts in progress	$	2,518,581	$	1,574,460
Estimated earnings, net of losses		405,891		300,514
Less—Billings to date		(3,033,112)		(1,958,567)
Less—Unbilled accounts receivable		(55,542)		(37,180)
	$	(164,182)	$	(120,773)

Costs and estimated earnings in excess of billings	$	2,736	$	10,213
Billings in excess of costs and estimated earnings		(166,918)		(130,986)
	$	(164,182)	$	(120,773)

Schedule of disaggregation of revenue


	Year Ended December 31,
Revenue by Service Provided	2019				2018				2017
Mechanical Services	$	2,251,560	86.1	%	$	2,176,223	99.7	%	$	1,787,922	100.0	%
Electrical Services		363,717	13.9	%		6,656	0.3	%		—	—
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Type of Customer	2019				2018				2017
Industrial	$	886,668	33.9	%	$	596,557	27.3	%	$	395,362	22.1	%
Education		412,318	15.8	%		391,937	18.0	%		351,808	19.7	%
Office Buildings		348,640	13.3	%		288,090	13.2	%		248,604	13.9	%
Healthcare		358,155	13.7	%		319,958	14.7	%		224,643	12.6	%
Government		162,507	6.2	%		143,958	6.6	%		140,843	7.9	%
Retail, Restaurants and Entertainment		248,083	9.5	%		225,348	10.3	%		223,593	12.5	%
Multi-Family and Residential		104,693	4.0	%		136,075	6.2	%		116,844	6.5	%
Other		94,213	3.6	%		80,956	3.7	%		86,225	4.8	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Activity Type	2019				2018				2017
New Construction	$	1,201,122	45.9	%	$	829,978	38.0	%	$	684,687	38.3	%
Existing Building Construction		793,159	30.3	%		796,946	36.5	%		580,737	32.4	%
Service Projects		231,228	8.9	%		206,506	9.5	%		197,703	11.1	%
Service Calls, Maintenance and Monitoring		389,768	14.9	%		349,449	16.0	%		324,795	18.2	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

Schedule of contract assets and liabilities


	Year Ended December 31,
	2019				2018
	Contract		Contract		Contract		Contract
	Assets		Liabilities		Assets		Liabilities
Balance at beginning of period	$	10,213	$	130,986	$	30,116	$	106,005
Change due to acquisitions / disposals		6,573		31,556		2,833		8,195
Change due to conditional versus unconditional		(14,050)		—		6,244		—
Reclassified to unbilled accounts receivable		—		—		(28,980)		—
Change in timing for performance obligation to be satisfied		—		4,376		—		16,786
Balance at end of period	$	2,736	$	166,918	$	10,213	$	130,986

Schedule of lease assets and liabilities

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


	December 31, 2019
Lease right-of-use assets	$	84,073
Lease liabilities:
Other current liabilities		14,016
Long-term lease liabilities		72,697
Total lease liabilities	$	86,713

Schedule of maturities of lease liabilities

The maturities of lease liabilities as of December 31, 2019 are as follows (in thousands):


Year ending December 31—
2020	$	17,124
2021		15,096
2022		12,873
2023		10,797
2024		9,222
Thereafter		36,954
Total Lease Payments		102,066
Less—Present Value Discount		(15,353)
Present Value of Lease Liabilities	$	86,713

Schedule of future minimum rental payments under noncancelable operating leases

The following table represents future minimum rental payments under noncancelable operating leases under ASC 840 as of December 31, 2018 (in thousands):


Year ending December 31—
2019	$	13,503
2020		10,768
2021		9,449
2022		7,707
2023		6,402
Thereafter		28,328
	$	76,157

Schedule of supplemental information related to leases

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


	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	16,895
Lease right-of-use assets obtained in exchange for lease liabilities	$	26,811

Summary of Significant Accounting Policies - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Maturities of lease liabilities:
2020	$ 17,124
2021	15,096
2022	12,873
2023	10,797
2024	9,222
Thereafter	36,954
Total Lease Payments	102,066
Less-Present Value Discount	(15,353)
Present Value of Lease Liabilities	86,713
Future minimum rental payments under noncancelable operating leases
2019		$ 13,503
2020		10,768
2021		9,449
2022		7,707
2023		6,402
Thereafter		28,328
Total future minimum rental payments		$ 76,157
Supplemental information related to leases:
Cash paid for amounts included in the measurement of lease liabilities	16,895
Lease right-of-use assets obtained in exchange for lease liabilities	$ 26,811

Employee Benefit Plans (Details) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) $ in Millions	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Employee Benefit Plans
Percentage of contributions of covered employees' salaries or wages	2.50%
Contribution	$ 14.2	$ 10.8	$ 7.8
Amount payable to plan	$ 0.3	$ 0.2
Number of employees who are union members \| item	7	6
Contributions made to multi-employer pension plans	$ 0.0	$ 0.0	$ 0.0
Period in which certain individuals are entitled to fixed annual payments	15 years
Maximum age under which certain individuals are entitled to fixed annual payments	65 years
Portion of benefits vesting after ten years of completed service (as a percent)	50.00%
Period of completed service over which 50% of benefits are vested	10 years
Portion of benefits vesting after fifteen years of completed service (as a percent)	75.00%
Period of completed service over which 75% of benefits are vested	15 years
Period of service over which benefits are fully vested	20 years
Unfunded benefit liability	$ 4.1	$ 4.3

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Cash Flow Information

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash paid (in thousands) for:


	Year Ended December 31,
	2019		2018		2017
Interest	$	8,817	$	3,743	$	2,832
Income taxes	$	45,288	$	33,401	$	38,144

Recent Accounting Pronouncements

Revenue Recognition

Contracts in progress are as follows (in thousands):


	December 31,
	2019		2018
Costs incurred on contracts in progress	$	2,518,581	$	1,574,460
Estimated earnings, net of losses		405,891		300,514
Less—Billings to date		(3,033,112)		(1,958,567)
Less—Unbilled accounts receivable		(55,542)		(37,180)
	$	(164,182)	$	(120,773)

Costs and estimated earnings in excess of billings	$	2,736	$	10,213
Billings in excess of costs and estimated earnings		(166,918)		(130,986)
	$	(164,182)	$	(120,773)

Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation via additional customer payments.

During the years ended December 31, 2018 and December 31, 2019, net revenue recognized from our performance obligations satisfied in previous periods was not material.

Disaggregation of Revenue


	Year Ended December 31,
Revenue by Service Provided	2019				2018				2017
Mechanical Services	$	2,251,560	86.1	%	$	2,176,223	99.7	%	$	1,787,922	100.0	%
Electrical Services		363,717	13.9	%		6,656	0.3	%		—	—
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Type of Customer	2019				2018				2017
Industrial	$	886,668	33.9	%	$	596,557	27.3	%	$	395,362	22.1	%
Education		412,318	15.8	%		391,937	18.0	%		351,808	19.7	%
Office Buildings		348,640	13.3	%		288,090	13.2	%		248,604	13.9	%
Healthcare		358,155	13.7	%		319,958	14.7	%		224,643	12.6	%
Government		162,507	6.2	%		143,958	6.6	%		140,843	7.9	%
Retail, Restaurants and Entertainment		248,083	9.5	%		225,348	10.3	%		223,593	12.5	%
Multi-Family and Residential		104,693	4.0	%		136,075	6.2	%		116,844	6.5	%
Other		94,213	3.6	%		80,956	3.7	%		86,225	4.8	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

	Year Ended December 31,
Revenue by Activity Type	2019				2018				2017
New Construction	$	1,201,122	45.9	%	$	829,978	38.0	%	$	684,687	38.3	%
Existing Building Construction		793,159	30.3	%		796,946	36.5	%		580,737	32.4	%
Service Projects		231,228	8.9	%		206,506	9.5	%		197,703	11.1	%
Service Calls, Maintenance and Monitoring		389,768	14.9	%		349,449	16.0	%		324,795	18.2	%
Total	$	2,615,277	100.0	%	$	2,182,879	100.0	%	$	1,787,922	100.0	%

Accounts Receivable

Contract Assets and Liabilities

The following table presents the changes in contract assets and contract liabilities (in thousands):


	Year Ended December 31,
	2019				2018
	Contract		Contract		Contract		Contract
	Assets		Liabilities		Assets		Liabilities
Balance at beginning of period	$	10,213	$	130,986	$	30,116	$	106,005
Change due to acquisitions / disposals		6,573		31,556		2,833		8,195
Change due to conditional versus unconditional		(14,050)		—		6,244		—
Reclassified to unbilled accounts receivable		—		—		(28,980)		—
Change in timing for performance obligation to be satisfied		—		4,376		—		16,786
Balance at end of period	$	2,736	$	166,918	$	10,213	$	130,986

During the years ended December 31, 2019 and 2018, we recognized revenue of $126.7 million and $97.6 million related to our contract liabilities at January 1, 2019 and January 1, 2018, respectively.

We did not have any impairment losses recognized on our receivables or contract assets in 2019 and 2018.

Remaining Performance Obligations

Accounts Receivable

Leases

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


	December 31, 2019
Lease right-of-use assets	$	84,073
Lease liabilities:
Other current liabilities		14,016
Long-term lease liabilities		72,697
Total lease liabilities	$	86,713

The maturities of lease liabilities as of December 31, 2019 are as follows (in thousands):


Year ending December 31—
2020	$	17,124
2021		15,096
2022		12,873
2023		10,797
2024		9,222
Thereafter		36,954
Total Lease Payments		102,066
Less—Present Value Discount		(15,353)
Present Value of Lease Liabilities	$	86,713

The following table represents future minimum rental payments under noncancelable operating leases under ASC 840 as of December 31, 2018 (in thousands):


Year ending December 31—
2019	$	13,503
2020		10,768
2021		9,449
2022		7,707
2023		6,402
Thereafter		28,328
	$	76,157

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


	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	16,895
Lease right-of-use assets obtained in exchange for lease liabilities	$	26,811

Inventories

Property and Equipment

Recoverability of Goodwill and Identifiable Intangible Assets

Long-Lived Assets

Acquisitions

We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition.

Self-Insurance Liabilities

Warranty Costs

Income Taxes

Concentrations of Credit Risk

Financial Instruments

Insurance Recovery

Acquisitions - Acquired Intangible Assets (Details) - Walker $ in Thousands	Apr. 01, 2019 USD ($)
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Fair Value	$ 90,200
Backlog
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	2 years
Estimated Fair Value	$ 4,600
Trade Names
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	25 years
Estimated Fair Value	$ 32,600
Customer Relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life	10 years
Estimated Fair Value	$ 53,000

Goodwill and Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2017
Impairment Testing
Goodwill impairment	$ 1,100		$ 1,105
Impairment testing, Scenario one
Impairment Testing
Impairment testing, discounted cash flow analysis weightage assigned		50.00%
Impairment testing, Scenario two
Impairment Testing
Impairment testing, public company approach weightage assigned		50.00%

Goodwill and Identifiable Intangible Assets, Net - Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Identifiable Intangible Assets, Net
Gross Book Value	$ 262,456	$ 176,975
Accumulated Amortization	(102,482)	(81,700)
Amortization of identifiable intangible assets	27,082	20,089	$ 17,404
Future amortization expense of identifiable intangible assets
2020	23,246
2021	19,191
2022	16,545
2023	15,082
2024	13,732
Thereafter	72,178
Total	159,974
Customer Relationships
Identifiable Intangible Assets, Net
Gross Book Value	183,061	128,480
Accumulated Amortization	$ (80,813)	(60,731)
Customer Relationships \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Customer Relationships \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	15 years
Backlog
Identifiable Intangible Assets, Net
Gross Book Value	$ 7,400	9,100
Accumulated Amortization	$ (6,388)	(8,260)
Backlog \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Backlog \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	2 years
Trade Names
Identifiable Intangible Assets, Net
Gross Book Value	$ 71,995	39,395
Accumulated Amortization	$ (15,281)	$ (12,709)
Trade Names \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	2 years
Trade Names \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	25 years
Customer Relationships Noncompete Agreements and Tradenames \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Customer Relationships Noncompete Agreements and Tradenames \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	25 years

Summary of Significant Accounting Policies - Insurance Recovery (Details) $ in Millions	3 Months Ended
	Dec. 31, 2019 USD ($)
Summary of Significant Accounting Policies
Gain due to insurance proceeds received	$ 4.8
Gain recorded as reduction in SG&A	1.6
Gain recorded as reduction in cost of services expense	$ 3.2

Income Taxes - Provision (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes - Provision (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current tax provision-
Federal	$ 33,281	$ 22,728	$ 35,434
State and Puerto Rico	8,388	8,589	6,054
Total current	41,669	31,317	41,488
Deferred tax provision (benefit)-
Federal	(3,750)	4,347	5,391
State and Puerto Rico	(501)	109	(1,213)
Total deferred	(4,251)	4,456	4,178
Provision for income taxes	$ 37,418	$ 35,773	$ 45,666

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock-Based Compensation
Stock-based compensation expense	$ 5.9	$ 7.2	$ 6.4
Income tax benefit	$ 1.3	$ 1.5	2.4
Minimum
Stock-Based Compensation
Sum of age and years of service for accelerated vesting on retirement of certain stock options and restricted stock awards	75 years
Stock Options
Stock-Based Compensation
Vesting period	3 years
Shares
Outstanding at beginning of year (in shares)	499
Exercised (in shares)	(114)
Expired (in shares)	(3)
Outstanding at end of year (in shares)	382	499
Options exercisable at end of year (in shares)	301
Weighted-Average Exercise Price
Outstanding at beginning of year (in dollars per share)	$ 25.65
Exercised (in dollars per share)	20.57
Expired (in dollars per share)	42.50
Outstanding at end of year (in dollars per share)	$ 27.06	$ 25.65
Other information
Intrinsic value of options exercised	$ 3.5	$ 6.7	$ 3.6
Weighted-average remaining contractual term of options exercisable	5 years 3 months 18 days
Aggregate intrinsic value of options exercisable	$ 8.0
Number of options that are vested and expected to vest (in shares)	400
Weighted average exercise price of options that are vested and expected to vest (in dollars per share)	$ 27.06
Weighted-average remaining contractual term of options that are vested and expected to vest	5 years 9 months 18 days
Aggregate intrinsic value of options that are vested and expected to vest	$ 8.7

Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity

Stockholders' Equity

12. Stockholders’ Equity

2012 Equity Incentive Plan

In May 2012, our stockholders approved our 2012 Equity Incentive Plan (the “2012 Plan”), which provides for the granting of incentive or non-qualified stock options, stock appreciation rights, restricted or deferred stock, dividend equivalents or other incentive awards to directors, employees, or consultants. The number of shares authorized and reserved for issuance under the 2012 Plan is 5.1 million shares. As of December 31, 2019, there were 2.9 million shares available for issuance under this plan; however, following adoption of the 2017 Plan (described below), no additional shares will be issued under the 2012 Plan. The 2012 Plan will expire in May 2022.

2017 Omnibus Incentive Plan

In May 2017, our stockholders approved our 2017 Omnibus Incentive Plan (the “2017 Plan”), which provides for the granting of incentive or non-qualified stock options, stock appreciation rights, restricted or deferred stock, dividend equivalents or other incentive awards to directors, employees, or consultants. The number of shares authorized and reserved for issuance under the 2017 Plan is 2.9 million shares. As of December 31, 2019, there were 2.4 million shares available for issuance under this plan. The 2017 Plan will expire in May 2027. Additionally, we have outstanding stock options, stock awards and stock units that were issued under other plans, and no further grants may be made under those plans.

Share Repurchase Program

On March 29, 2007, our Board of Directors approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock. Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On November 19, 2019, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.8 million shares. Since the inception of the repurchase program, the Board has approved 9.5 million shares to be repurchased. As of December 31, 2019, we have repurchased a cumulative total of 8.6 million shares at an average price of $17.70 per share under the repurchase program.

The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactions as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend or terminate the program at any time. During the twelve months ended December 31, 2019, we repurchased 0.4 million shares for approximately $19.6 million at an average price of $45.58 per share.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted EPS is computed considering the dilutive effect of stock options, restricted stock, restricted stock units and performance stock units. The vesting of unvested contingently issuable performance stock units is based on the achievement of certain earnings per share targets and total shareholder return. These shares are considered contingently issuable shares for purposes of calculating diluted earnings per share.

These shares are not included in the diluted earnings per share denominator until the performance criteria are met, if it is assumed that the end of the reporting period was the end of the contingency period.

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

There were less than 0.1 million anti-dilutive stock options excluded from the calculation of diluted EPS for the years ended December 31, 2019, 2018 and 2017, respectively.

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



	Year Ended December 31,
	2019	2018	2017
Common shares outstanding, end of period	36,658	36,894	37,187
Effect of using weighted average common shares outstanding	196	308	52
Shares used in computing earnings per share—basic	36,854	37,202	37,239
Effect of shares issuable under stock option plans based on the treasury stock method	204	283	316
Effect of restricted and contingently issuable shares	73	107	117
Shares used in computing earnings per share—diluted	37,131	37,592	37,672

Fair Value Measurements (Details) $ in Thousands	3 Months Ended	12 Months Ended
Fair Value Measurements (Details) $ in Thousands	Mar. 31, 2017 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Fair Value Measurements
Number of employees covered under life insurance policies \| item		65
Combined face value of life insurance policies		$ 50,600
Cash surrender value		3,900	$ 3,300
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Goodwill impairment	$ 1,100			$ 1,105
Contingent earn-out obligations
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Balance at beginning of year		7,375	7,993
Issuances		19,500	4,366
Settlements		(1,369)	(7,050)
Adjustments to fair value		(2,991)	(2,066)
Balance at end of period		28,497	7,375	7,993
Recurring basis \| Total
Fair Value Measurements
Cash and cash equivalents		50,788	45,620
Life insurance-cash surrender value		3,905	3,252
Contingent earn-out obligations		28,497	7,375
Recurring basis \| Quoted Market Prices In Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Cash and cash equivalents		50,788	45,620
Recurring basis \| Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Fair Value Measurements
Life insurance-cash surrender value		3,905	3,252
Recurring basis \| Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Contingent earn-out obligations		28,497	$ 7,375
Non recurring basis \| Significant Unobservable Inputs (Level 3)
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Goodwill impairment		$ 0		$ 1,100

Detail of Certain Balance Sheet Accounts

12 Months Ended

Dec. 31, 2019

Detail of Certain Balance Sheet Accounts

Detail of Certain Balance Sheet Accounts

7. Detail of Certain Balance Sheet Accounts

Activity in our allowance for doubtful accounts consists of the following (in thousands):


	December 31,
	2019		2018		2017
Balance at beginning of year	$	5,898	$	3,400	$	4,288
Bad debt expense (benefit)		2,978		3,562		182
Deductions for uncollectible receivables written off, net of recoveries		(3,924)		(1,304)		(1,829)
Allowance for doubtful accounts of acquired companies at date of acquisition		1,955		240		759
Balance at end of year	$	6,907	$	5,898	$	3,400

Other current liabilities consist of the following (in thousands):


	December 31,
	2019		2018
Accrued warranty costs	$	7,452	$	6,453
Current lease liability		14,016		—
Accrued job losses		2,226		1,495
Accrued sales and use tax		2,938		2,685
Deferred revenue		5,506		5,233
Liabilities due to former owners		11,219		2,045
Other current liabilities		38,273		14,941
	$	81,630	$	32,852

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2019

Selected Quarterly Financial Data (Unaudited)

Selected Quarterly Financial Data (Unaudited)

15. Selected Quarterly Financial Data (Unaudited)

Quarterly financial information for the years ended December 31, 2019 and 2018 is summarized as follows (in thousands, except per share data):


	2019
	Q1		Q2		Q3		Q4
Revenue	$	538,473	$	650,302	$	706,918	$	719,584
Gross profit (1)		106,665		120,016		142,702		132,560
Net income		19,866		24,173		36,233		34,052
INCOME PER SHARE:
Basic	$	0.54	$	0.65	$	0.98	$	0.93
Diluted	$	0.53	$	0.65	$	0.98	$	0.92


	2018
	Q1		Q2		Q3		Q4
Revenue	$	464,941	$	535,043	$	594,536	$	588,359
Gross profit		89,053		111,183		127,868		118,175
Net income		16,659		32,547		38,541		25,156
INCOME PER SHARE:
Basic	$	0.45	$	0.87	$	1.03	$	0.68
Diluted	$	0.44	$	0.87	$	1.02	$	0.67

(1)In the fourth quarter of 2019, we recorded a $4.8 million gain due to insurance proceeds we received in the fourth quarter related to the ransomware incident that occurred in April 2019.

The sums of the individual quarterly earnings per share amounts do not necessarily agree with year-to-date earnings per share as each quarter’s computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of options and contingently issuable restricted stock in each quarter.

Debt Obligations

12 Months Ended

Dec. 31, 2019

Debt Obligations

Debt Obligations

8. Debt Obligations

Debt obligations consist of the following (in thousands):


	December 31,
	2019		2018
Revolving credit facility	$	28,000	$	50,000
Term loan		150,000		—
Notes to former owners		48,483		26,813
Other debt		—		105
Total principal amount		226,483		76,918
Less—unamortized debt issuance costs		(348)		—
Total debt, net of unamortized debt issuance costs		226,135		76,918
Less—current portion		(20,817)		(3,279)
Total long-term portion of debt, net	$	205,318	$	73,639

At December 31, 2019, future principal payments of debt are as follows (in thousands):


Year ended December 31—
2020	$	20,817
2021		17,666
2022		27,500
2023		27,500
2024		22,500
Thereafter		110,500
	$	226,483

Interest expense included the following primary elements (in thousands):


	Year Ended December 31,
	2019		2018		2017
Interest expense on notes to former owners	$	1,531	$	642	$	365
Interest expense on borrowings and unused commitment fees		6,887		2,211		1,862
Letter of credit fees		512		474		553
Amortization of debt financing costs		387		383		376
Total	$	9,317	$	3,710	$	3,156

Revolving Credit Facility and Term Loan

On December 20, 2019, we amended our senior credit facility (the “Facility”) provided by a syndicate of banks, increasing our borrowing capacity from $400.0 million to $600.0 million. As amended, the Facility is composed of a revolving credit line in the amount of $450.0 million and a $150.0 million term loan, and the Facility also provides for a $150.0 million accordion or increase option for the revolving portion of the Facility. The amended Facility also includes

a sublimit of up to $160.0 million issuable in the form of letters of credit. The Facility expires in January 2025 and is secured by a first lien on substantially all of our personal property except for assets related to projects subject to surety bonds and assets held by certain unrestricted subsidiaries and our wholly owned captive insurance company, and a second lien on our assets related to projects subject to surety bonds. In 2019, we incurred approximately $1.4 million in financing and professional costs in connection with an amendment to the Facility which are being amortized over the remaining term of the Facility. Of this amount, $0.4 million is attributable to the term loan and is being amortized using the effective interest method. The remaining $1.0 million is attributable to the revolving credit line, which combined with the previous unamortized costs of $1.3 million, is being amortized over the remaining term of the Facility on a straight-line basis as a non-cash charge to interest expense. For the term loan, we are required to make quarterly payments increasing over time from 1.25% to 3.75% of the original aggregate principal amount of the term loan, with the balance due in January 2025. As of December 31, 2019, we had $150.0 million principal outstanding on the term loan, $28.0 million of outstanding borrowings on the revolving credit facility, $40.9 million in letters of credit outstanding and $381.1 million of credit available.

Collateral

A common practice in our industry is the posting of payment and performance bonds with customers. These bonds are offered by financial institutions known as sureties and provide assurance to the customer that in the event we encounter significant financial or operational difficulties, the surety will arrange for the completion of our contractual obligations and for the payment of our vendors on the projects subject to the bonds. In cooperation with our lenders, we granted our sureties a first lien on assets such as receivables, costs and estimated earnings in excess of billings, and equipment specifically identifiable to projects for which bonds are outstanding, as collateral for potential obligations under bonds. As of December 31, 2019, the book value of these assets was approximately $58.2 million.

Covenants and Restrictions

The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. Credit Facility Adjusted EBITDA is defined under the Facility for financial covenant purposes as net earnings for the four quarters ending as of any given quarterly covenant compliance measurement date, plus the corresponding amounts for (a) interest expense; (b) provision for income taxes; (c) depreciation and amortization; (d) stock compensation; (e) other non-cash charges; and (f) pre-acquisition results of acquired companies. The following is a reconciliation of Credit Facility Adjusted EBITDA to net income for 2019 (in thousands):


Net income	$	114,324
Provision for income taxes		37,418
Interest expense, net		9,093
Depreciation and amortization expense		51,572
Stock-based compensation		5,878
Pre-acquisition results of acquired companies, as defined under the Facility		1,404
Credit Facility Adjusted EBITDA	$	219,689

The Facility’s principal financial covenants include:

Total Leverage Ratio—The Facility requires that the ratio of our Consolidated Total Indebtedness to our Credit Facility Adjusted EBITDA not exceed 3.00 to 1.00 as of the end of each fiscal quarter. The leverage ratio as of December 31, 2019 was 1.0.

Fixed Charge Coverage Ratio—The Facility requires that the ratio of (a) Credit Facility Adjusted EBITDA, less non-financed capital expenditures, provision for income taxes, dividends, and amounts used to repurchase stock when the Company’s Total Leverage Ratio exceeds 2.00 to 1.00, to (b) the sum of interest expense and scheduled principal payments of indebtedness be at least 1.50 to 1.00. Credit Facility Adjusted EBITDA, capital expenditures, provision for income taxes, dividends, stock repurchase payments, interest expense, and scheduled principal payments are defined under the Facility for purposes of this covenant to be amounts for the four quarters ending as of any given quarterly covenant compliance measurement date. The fixed charge coverage ratio as of December 31, 2019 was 11.3.

Other Restrictions—The Facility permits acquisitions of up to $5.0 million per transaction, provided that the aggregate purchase price of such an acquisition and of acquisitions in the same fiscal year does not exceed $10.0 million. However, these limitations only apply when the Company’s Total Leverage Ratio is greater than 2.50 to 1.00.

While the Facility’s financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter-end covenant compliance measurement date were to cause us to violate the Facility’s leverage ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted by the lenders.

We were in compliance with all of our financial covenants as of December 31, 2019.

Interest Rates and Fees

There are two interest rate options for borrowings under the Facility, the Base Rate Loan Option and the Eurodollar Rate Loan Option. Additional margins are then added to these two rates. Under the Base Rate Loan Option, the interest rate is determined based on the highest of the Federal Funds Rate plus 0.5%, the prime lending rate offered by Wells Fargo Bank, N.A. or the one-month Eurodollar Rate plus 1.00%. Under the Eurodollar Rate Loan Option, the interest rate is determined based on the one- to six-month Eurodollar Rate. The Eurodollar Rate corresponds very closely to rates described in various general business media sources as the London Interbank Offered Rate or “LIBOR.” Additional margins are then added to these rates. The additional margins are determined based on the ratio of our Consolidated Total Indebtedness as of a given quarter end to our “Credit Facility Adjusted EBITDA” for the twelve months ending as of that quarter end, as defined in the credit agreement and shown below.

The interest rates under the Facility are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. For illustrative purposes, the following are the respective market rates as of December 31, 2019 relating to interest options under the Facility:


Base Rate Loan Option:
Federal Funds Rate plus 0.50%		2.05%
Wells Fargo Bank, N.A. Prime Rate		4.75%
One-month LIBOR plus 1.00%		2.76%
Eurodollar Rate Loan Option:
One-month LIBOR		1.76%
Six-month LIBOR		1.91%

Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance programs. We have also occasionally used letters of credit to guarantee performance under our contracts and to ensure payment to our subcontractors and vendors under those contracts. Our lenders issue such letters of credit through the Facility. A letter of credit commits the lenders to pay specified amounts to the holder of the letter of credit if the holder demonstrates that we have failed to perform specified actions. If this were to occur, we would be required to reimburse the lenders for amounts they fund to honor the letter of credit holder’s claim. Absent a claim, there is no payment or reserving of funds by us in connection with a letter of credit. However, because a claim on a letter of credit would require immediate reimbursement by us to our lenders, letters of credit are treated as a use of facility capacity just the same as actual borrowings. We have never had a claim made against a letter of credit that resulted in payments by a lender or by us and believe such claim is unlikely in the foreseeable future.

Commitment fees are payable on the portion of the revolving loan capacity not in use for borrowings or letters of credit at any given time. Letter of credit fees and commitment fees are based on the ratio of Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA.


	Consolidated Total Indebtedness to
	Credit Facility Adjusted EBITDA
	Less than 1.00		1.00 to 1.75		1.75 to 2.50		2.50 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.25	%	0.50	%	0.75	%	1.00	%
Eurodollar Rate Loan Option	1.25	%	1.50	%	1.75	%	2.00	%
Letter of credit fees	1.25	%	1.50	%	1.75	%	2.00	%
Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time	0.20	%	0.25	%	0.30	%	0.35	%

The weighted average interest rate applicable to the borrowings under the revolving credit facility was approximately 3.2% as of December 31, 2019. The weighted average interest rate applicable to the term loan was approximately 3.3% as of December 31, 2019.

Notes to Former Owners

As part of the consideration used to acquire six companies, we have outstanding notes to the former owners. These notes had an outstanding balance of $48.5 million as of December 31, 2019. In conjunction with the Walker acquisition in the second quarter of 2019, we issued a promissory note to former owners with an outstanding balance of $25.0 million as of December 31, 2019 that bears interest, payable quarterly, at a stated interest rate of 4.0%. The principal is due in equal installments in April 2022 and April 2023. In conjunction with the BCH acquisition in the second quarter of 2017, we issued a promissory note to former owners with an outstanding balance of $14.3 million as of December 31, 2019 that bears interest, payable quarterly, at a stated interest rate of 3.0%. The principal is due in equal installments in April 2020 and 2021. In conjunction with four immaterial acquisitions in 2018 and 2019, we issued notes to former owners with an outstanding balance of $9.2 million as of December 31, 2019 that bear interest, payable quarterly, at stated interest rates ranging from 2.9% - 3.5%. The principal amounts are due between May 2020 – July 2021.

Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Selected Quarterly Financial Data (Unaudited)
Revenue	$ 719,584	$ 706,918	$ 650,302	$ 538,473	$ 588,359	$ 594,536	$ 535,043	$ 464,941	$ 2,615,277	$ 2,182,879	$ 1,787,922
Gross Profit	132,560	142,702	120,016	106,665	118,175	127,868	111,183	89,053	501,943	446,279	366,281
Net income	$ 34,052	$ 36,233	$ 24,173	$ 19,866	$ 25,156	$ 38,541	$ 32,547	$ 16,659	$ 114,324	$ 112,903	$ 55,272
Basic-
Basic (in dollars per share)	$ 0.93	$ 0.98	$ 0.65	$ 0.54	$ 0.68	$ 1.03	$ 0.87	$ 0.45	$ 3.10	$ 3.03	$ 1.48
Diluted-
Diluted (in dollars per share)	$ 0.92	$ 0.98	$ 0.65	$ 0.53	$ 0.67	$ 1.02	$ 0.87	$ 0.44	$ 3.08	$ 3.00	$ 1.47
Gain due to insurance proceeds received	$ 4,800

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Goodwill and Identifiable Intangible Assets, Net - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Changes in the carrying amount of goodwill
Balance at beginning of year		$ 235,182	$ 200,584
Acquisitions and purchase price adjustments (See Note 4)		97,265	34,598
Impairment adjustment	$ (1,100)			$ (1,105)
Balance at end of period		332,447	235,182	200,584
Mechanical Services Segment
Changes in the carrying amount of goodwill
Accumulated impairment charges		116,600	116,600
Mechanical Services
Changes in the carrying amount of goodwill
Balance at beginning of year		235,182	200,584
Acquisitions and purchase price adjustments (See Note 4)		579	34,598
Impact of segment reorganization		(1,101)
Balance at end of period		234,660	$ 235,182	$ 200,584
Electrical Services
Changes in the carrying amount of goodwill
Acquisitions and purchase price adjustments (See Note 4)		96,686
Impact of segment reorganization		1,101
Balance at end of period		$ 97,787

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Contracts in progress
Costs incurred on contracts in progress	$ 2,518,581	$ 1,574,460
Estimated earnings, net of losses	405,891	300,514
Less-Billings to date	(3,033,112)	(1,958,567)
Less-Unbilled accounts receivable	(55,542)	(37,180)
Contracts in progress	(164,182)	(120,773)
Costs and estimated earnings in excess of billings	2,736	10,213	$ 30,116
Billings in excess of costs and estimated earnings	$ (166,918)	(130,986)	$ (106,005)
Period during which progress billings or contract price can be withheld until completion of work	6 months
Retention receivable	$ 111,700	80,800
Retention payable	$ 15,800	$ 13,700
Revenue, Performance Obligation, Description of Payment Terms	We typically invoice our customers with payment terms of net due in 30 days
Receivable payment terms (in days)	30 days
Minimum
Contracts in progress
Receivable payment terms (in days)	45 days
Payments received term (in days)	30 days
Maximum
Contracts in progress
Receivable payment terms (in days)	60 days
Payments received term (in days)	90 days

Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Information

Summary of information about reportable segments


	Mechanical Services		Electrical Services		Corporate		Consolidated
Total Assets at December 31, 2019	$	1,056,609	$	372,254	$	76,149	$	1,505,012
Total Assets at December 31, 2018	$	970,995	$	23,078	$	68,491	$	1,062,564

	Year Ended December 31, 2019
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	2,251,560	$	363,717	$	—	$	2,615,277
Gross Profit	$	465,144	$	36,799	$	—	$	501,943
Capital Expenditures	$	27,933	$	1,504	$	2,314	$	31,750

	Year Ended December 31, 2018
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	2,176,223	$	6,656	$	—	$	2,182,879
Gross Profit	$	444,960	$	1,319	$	—	$	446,279
Capital Expenditures	$	25,945	$	57	$	1,266	$	27,268

	Year Ended December 31, 2017
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	1,787,922	$	—	$	—	$	1,787,922
Gross Profit	$	366,281	$	—	$	—	$	366,281
Capital Expenditures	$	34,587	$	—	$	880	$	35,467

Summary of Significant Accounting Policies - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Contract Assets
Balance at beginning of period	$ 10,213	$ 30,116
Change due to acquisitions / disposals	6,573	2,833
Change due to conditional versus unconditional	(14,050)	6,244
Reclassified to unbilled accounts receivable		(28,980)
Balance at end of period	2,736	10,213
Contract Liabilities
Balance at beginning of period	130,986	106,005
Change due to acquisitions / disposals	31,556	8,195
Change in timing for performance obligation to be satisfied	4,376	16,786
Balance at end of period	166,918	130,986
Revenue related to our contract liabilities	$ 126,700
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Contract Liabilities
Revenue related to our contract liabilities		$ 97,600

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2019	Feb. 21, 2020	Jun. 28, 2019
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	1-13011
Entity Registrant Name	Comfort Systems USA, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	76-0526487
Entity Address, Address Line One	675 Bering Drive
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77057
City Area Code	713
Local Phone Number	830-9600
Title of 12(b) Security	Common Stock, $.01 par value
Trading Symbol	FIX
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 1,830
Entity Common Stock, Shares Outstanding		36,613,587
Entity Central Index Key	0001035983
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Amendment Flag	false

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of provision for income taxes relating to continuing operations

Our provision for income taxes relating to continuing operations consists of the following (in thousands):


	December 31,
	2019		2018		2017
Current tax provision—
Federal	$	33,281	$	22,728	$	35,434
State and Puerto Rico		8,388		8,589		6,054
Total current		41,669		31,317		41,488
Deferred tax provision (benefit)—
Federal		(3,750)		4,347		5,391
State and Puerto Rico		(501)		109		(1,213)
Total deferred		(4,251)		4,456		4,178
Provision for income taxes	$	37,418	$	35,773	$	45,666

Schedule of difference in income taxes provided for and the amounts determined by applying the federal statutory tax rate to income before income taxes results


	December 31,
	2019			2018			2017
Federal statutory rate of—		21	%		21	%		35	%
Income taxes at the federal statutory rate	$	31,866		$	31,222		$	35,328
Increases (decreases) resulting from—
Net state income taxes		6,644			7,470			2,838
Valuation allowances		(279)			(2,852)			91
Net unrecognized tax benefits		7,338			(15)			153
Nondeductible expenses		2,180			1,926			1,134
R&D tax credits		(4,569)			(2,726)			—
179D deduction		(5,126)			—			—
Net operating loss carryforwards		—			2,225			—
Stock-based compensation deductions		(714)			(1,293)			(1,320)
Domestic production activities deduction		—			—			(2,112)
Corporate tax rate reduction to 21%		—			—			9,478
Other		78			(184)			76
Provision for income taxes	$	37,418		$	35,773		$	45,666

Schedule of significant components of the net deferred tax assets and net deferred tax liabilities as reflected on the balance sheet

Significant components of the deferred tax assets and deferred tax liabilities as reflected on the balance sheets are as follows (in thousands):


	Year Ended
	December 31,
	2019		2018
Deferred tax assets—
Accounts receivable and allowance for doubtful accounts	$	1,660	$	1,445
Stock-based compensation		2,561		2,538
Accrued liabilities and expenses		25,569		19,449
Lease liabilities		20,873		—
Net operating loss carryforwards		2,750		3,242
Intangible assets		7,988		5,071
Other		525		550
Subtotal		61,926		32,295
Valuation allowances		(369)		(648)
Total deferred tax assets		61,557		31,647
Deferred tax liabilities—
Property and equipment		(11,286)		(10,488)
Lease right-of-use asset		(20,873)		—
Long-term contracts		(876)		(688)
Goodwill		(6,020)		(3,864)
Other		(2,004)		(360)
Total deferred tax liabilities		(41,059)		(15,400)
Net deferred tax assets	$	20,498	$	16,247

Schedule of deferred income tax assets and liabilities included in the consolidated balance sheets

The deferred tax assets and liabilities reflected above are included in the consolidated balance sheets as follows (in thousands):


	December 31,
	2019		2018
Deferred tax assets	$	21,923	$	17,634
Deferred tax liabilities	$	1,425	$	1,387

Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):


	Year Ended
	December 31,
	2019		2018		2017
Balance at beginning of year	$	2,966	$	8,929	$	240
Additions based on tax positions related to current year		—		—		8,689
Additions based on tax positions related to prior years		7,473		2,726		—
Reductions for tax positions related to prior years		(240)		(8,689)		—
Reductions for settlements with tax authorities		—		—		—
Balance at end of year	$	10,199	$	2,966	$	8,929

Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information

Segment Information

14. Segment Information

We have two reportable segments: (a) our mechanical segment, which includes HVAC, plumbing, piping, and controls, as well as off-site construction, monitoring and fire protection; and (b) our electrical segment, which includes installation and servicing of electrical systems. We consider these two lines of business to be separate segments because they require different skill sets, and the business models for providing services have some differences, as a mechanical system requires ongoing maintenance and monitoring and an electrical system generally does not. However, the business model for installation of new systems or retrofitting existing systems is very similar between the two segments.

Our activities are within the mechanical services industry and the electrical services industry, which represent our two reportable segments. We aggregate our operating segments into two reportable segments, as the operating segments meet all of the aggregation criteria. Substantially all of our revenue is generated, and all of our assets are located, in the United States, our country of domicile. The following table presents information about our reportable segments (in thousands):


	Mechanical Services		Electrical Services		Corporate		Consolidated
Total Assets at December 31, 2019	$	1,056,609	$	372,254	$	76,149	$	1,505,012
Total Assets at December 31, 2018	$	970,995	$	23,078	$	68,491	$	1,062,564

	Year Ended December 31, 2019
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	2,251,560	$	363,717	$	—	$	2,615,277
Gross Profit	$	465,144	$	36,799	$	—	$	501,943
Capital Expenditures	$	27,933	$	1,504	$	2,314	$	31,750

	Year Ended December 31, 2018
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	2,176,223	$	6,656	$	—	$	2,182,879
Gross Profit	$	444,960	$	1,319	$	—	$	446,279
Capital Expenditures	$	25,945	$	57	$	1,266	$	27,268

	Year Ended December 31, 2017
	Mechanical Services		Electrical Services		Corporate		Consolidated
Revenue	$	1,787,922	$	—	$	—	$	1,787,922
Gross Profit	$	366,281	$	—	$	—	$	366,281
Capital Expenditures	$	34,587	$	—	$	880	$	35,467

Subsequent Events (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
Subsequent Events (Details) - USD ($) $ in Thousands	Feb. 01, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Subsequent Events
Revenues		$ 719,584	$ 706,918	$ 650,302	$ 538,473	$ 588,359	$ 594,536	$ 535,043	$ 464,941	$ 2,615,277	$ 2,182,879	$ 1,787,922
Starr [Member]
Subsequent Events
Revenues										$ 90,000
Subsequent Event \| Starr [Member]
Subsequent Events
Revenues	$ 100,000

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 6,907	$ 5,898
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	102,969,912	102,969,912
Common stock, shares issued	41,123,365	41,123,365
Treasury stock, shares	4,465,448	4,229,653

Business and Organization

12 Months Ended

Dec. 31, 2019

Business and Organization

Business and Organization

1. Business and Organization

Comfort Systems USA, Inc., a Delaware corporation, provides comprehensive mechanical and electrical contracting services, which principally includes heating, ventilation and air conditioning (“HVAC”), plumbing, electrical, piping and controls, as well as off-site construction, monitoring and fire protection. We install, maintain, repair and replace products and systems throughout the United States. Approximately 45.9% of our consolidated 2019 revenue is attributable to installation of systems in newly constructed facilities, with the remaining 54.1% attributable to maintenance, repair and replacement services. The terms “Comfort Systems,” “we,” “us,” or “the Company,” refer to Comfort Systems USA, Inc. or Comfort Systems USA, Inc. and its consolidated subsidiaries, as appropriate in the context.

Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle
Lease right-of-use assets	$ 84,073
Operating lease liability	$ 86,713
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle
Lease right-of-use assets		$ 75,900
Operating lease liability		$ 75,900

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Measurements

Summary of fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis

The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall, for assets and liabilities measured on a recurring basis as of December 31, 2019 and 2018 (in thousands):


	Fair Value Measurements at December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	50,788	$	—	$	—	$	50,788
Life insurance—cash surrender value	$	—	$	3,905	$	—	$	3,905
Contingent earn-out obligations	$	—	$	—	$	28,497	$	28,497

	Fair Value Measurements at December 31, 2018
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	45,620	$	—	$	—	$	45,620
Life insurance—cash surrender value	$	—	$	3,252	$	—	$	3,252
Contingent earn-out obligations	$	—	$	—	$	7,375	$	7,375

Schedule of reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)

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


	December 31,
	2019		2018
Balance at beginning of year	$	7,375	$	7,993
Issuances		19,500		4,366
Settlements		(1,369)		(7,050)
Adjustments to fair value		2,991		2,066
Balance at end of year	$	28,497	$	7,375

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Stock-Based Compensation

Summary of activity under the entity's stock option plans

The following table summarizes activity under our stock option plans (shares in thousands):


	Year Ended
	December 31,
	2019
		Weighted-
		Average
Stock Options	Shares	Exercise Price
Outstanding at beginning of year	499	$	25.65
Granted	—	$	—
Exercised	(114)	$	20.57
Forfeited	—	$	—
Expired	(3)	$	42.50
Outstanding at end of year	382	$	27.06
Options exercisable at end of year	301

Summary information about stock options outstanding

The following table summarizes information about stock options outstanding at December 31, 2019 (shares in thousands):


	Options Outstanding				Options Exercisable
		Weighted-
		Average
	Number	Remaining	Weighted-		Number	Weighted-
	Outstanding at	Contractual	Average		Exercisable at	Average
Range of Exercise Prices	12/31/2019	Life	Exercise Price		12/31/2019	Exercise Price
$11.21 - $15.00	45	2.9	$	13.60	45	$	13.60
$15.01 - $35.00	200	5.1	$	21.47	200	$	21.47
$35.01 - $42.50	137	7.7	$	39.67	56	$	38.51
$11.21 - $42.50	382	5.8	$	27.06	301	$	23.45

Schedule of fair values and the assumptions used for the grants


	Year Ended December 31,
	2018		2017
Weighted-average fair value per share of options granted	$	13.06	$	11.43
Fair value assumptions:
Expected dividend yield		0.79%		0.89%
Expected stock price volatility		31.7%		34.5%
Risk-free interest rate		2.66%		2.11%
Expected term		5.3 years		5.3 years

Summary of information about nonvested stock option awards and changes

The following table summarizes information about nonvested stock option awards as of December 31, 2019 and changes for the year ended December 31, 2019 (shares in thousands):


		Weighted-Average
		Grant Date
Stock Options	Shares	Fair Value
Nonvested at December 31, 2018	163	$	11.99
Granted	—	$	—
Vested	(82)	$	11.46
Forfeited	—	$	—
Nonvested at December 31, 2019	81	$	12.53

Summary of activity under the entity's restricted stock plans

The following table summarizes activity under our restricted stock plans (shares in thousands):


	Year Ended
	December 31,
	2019
		Weighted
		Average Grant
Restricted Stock and Restricted Stock Units	Shares	Date Fair Value
Unvested at beginning of year	78	$	38.17
Granted	87	$	51.02
Vested	(69)	$	41.58
Forfeited	(5)	$	44.01
Unvested at end of year	91	$	47.58

Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

Claims and Lawsuits

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

Surety

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. If we fail to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services under a contract, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the surety for any expenses or outlays it incurs. To date, we are not aware of any losses to our sureties in connection with bonds the sureties have posted on our behalf, and do not expect such losses to be incurred in the foreseeable future.

Current market conditions for surety markets and bonding capacity are adequate with acceptable terms and conditions. Historically, approximately 15% to 25% of our business has required bonds. While we currently have strong surety relationships to support our bonding needs, future market conditions or changes in the sureties’ assessment of our operating and financial risk could cause the sureties to decline to issue bonds for our work. If that were to occur, the alternatives include doing more business that does not require bonds, posting other forms of collateral for project performance such as letters of credit or cash, and seeking bonding capacity from other sureties. We would likely also encounter concerns from customers, suppliers and other market participants as to our creditworthiness. While we believe our general operating and financial characteristics would enable us to ultimately respond effectively to an interruption in the availability of bonding capacity, such an interruption would likely cause our revenue and profits to decline in the near term.

Self-Insurance

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

Our self-insurance arrangements as of December 31, 2019 were as follows:

Workers’ Compensation—The per-incident deductible for workers’ compensation is $250,000. Losses above $250,000 are determined by statutory rules on a state-by-state basis and are fully covered by excess workers’ compensation insurance.

Employer’s Liability—For employer’s liability, the per-incident deductible is $250,000 and then we have several layers of excess loss insurance policies that cover losses up to $125.0 million in aggregate across this risk area (as well as general liability and auto liability noted below).

General Liability—For general liability, the per-incident deductible is $250,000. We are fully insured for the next $7.5 million of each loss, and then have several layers of excess loss insurance policies that cover losses up to $125.0 million in aggregate across this risk area (as well as employer’s liability noted above and auto liability noted below).

Auto Liability—For auto liability, the per-incident deductible is $250,000. We are fully insured for the next $7.5 million of each loss, and then have several layers of excess loss insurance policies that cover losses up to $125.0 million in aggregate across this risk area (as well as employer’s liability and general liability noted above).

Employee Medical—We have three medical plans. The deductible for employee group health claims is $350,000 per person, per policy (calendar) year for each plan. Insurance then covers any responsibility for medical claims in excess of the deductible amount.

Our $125.0 million of aggregate excess loss coverage above applicable per-incident deductibles represents one policy limit that applies to all lines of risk; we do not have a separate $125.0 million of excess loss coverage for each of general liability, employer’s liability and auto liability.

Acquisitions (Tables)

12 Months Ended

Dec. 31, 2019

Acquisitions

Schedule of acquisition date fair value of consideration transferred and the acquisition date fair value of the identifiable assets acquired and liabilities assumed, including an amount for goodwill

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


Consideration transferred:
Cash paid at closing	$	178,000
Advance to former owners		20,500
Working capital adjustment		(7,809)
Notes issued to former owners		25,000
Tax equalization payment		202
Estimated fair value of contingent earn-out payments		19,500
	$	235,393
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	4,850
Billed and unbilled accounts receivable		92,309
Other current assets		8,225
Other long-term assets		53
Property and equipment		4,970
Goodwill		96,686
Identifiable intangible assets		90,200
Lease right-of-use asset		9,195
Accounts payable		(20,220)
Accrued compensation and benefits		(974)
Billings in excess of costs and estimated earnings		(31,553)
Other current liabilities		(11,205)
Long-term lease liabilities		(7,143)
	$	235,393

Schedule of acquired intangible assets

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


	Valuation Method	Estimated Useful Life		Estimated Fair Value
Backlog	Excess earnings	2 years	$	4,600
Trade Names	Relief-from-royalty	25 years		32,600
Customer Relationships	Excess earnings	10 years		53,000
Total			$	90,200

Schedule of unaudited pro forma consolidated results of operations

The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2018, are as follows (in thousands):


	Year Ended December 31,
	2019		2018
Revenue	$	2,703,638	$	2,574,206
Pre-tax income	$	152,136	$	143,473

Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

Employee Benefit Plans

Employee Benefit Plans

10. Employee Benefit Plans

We and certain of our subsidiaries sponsor various retirement plans for most full-time and some part-time employees. These plans primarily consist of defined contribution plans. The defined contribution plans generally provide for contributions up to 2.5% of covered employees’ salaries or wages. These contributions totaled $14.2 million in 2019, $10.8 million in 2018 and $7.8 million in 2017. Of these amounts, approximately $0.3 million and $0.2 million were payable to the plans at December 31, 2019 and 2018, respectively.

Certain of our subsidiaries also participate or have participated in various multi-employer pension plans for the benefit of employees who are union members. As of December 31, 2019 and 2018, we had 7 and 6, respectively, who were union members. There were no contributions made to multi-employer pension plans in 2019, 2018 or 2017. The data available from administrators of other multi-employer pension plans is not sufficient to determine the accumulated benefit obligations, nor the net assets attributable to the multi-employer plans in which our employees participate or previously participated.

Certain individuals at one of our operating units are entitled to receive fixed annual payments that reach a maximum amount, as specified in the related agreements, for a 15 year period following retirement or, in some cases, the attainment of 65 years of age. We recognize the unfunded status of the plan as a non-current liability in our Consolidated Balance Sheet. Benefits vest 50% after ten years of service, 75% after fifteen years of service and are fully vested after 20 years of service. We had an unfunded benefit liability of $4.1 million and $4.3 million recorded as of December 31, 2019 and 2018.

Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events

Subsequent Events

16. Subsequent Events

Effective as of February 1, 2020, we acquired all of the issued and outstanding common stock of Starr Electric Company, Incorporated and each of its wholly-owned subsidiaries (collectively, “Starr”). Starr is headquartered in Greensboro, North Carolina, and is a leader in commercial and industrial electrical work. We expect Starr to initially contribute annualized revenues of approximately $90 million to $100 million.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS
REVENUE	$ 2,615,277	$ 2,182,879	$ 1,787,922
COST OF SERVICES	2,113,334	1,736,600	1,421,641
Gross profit	501,943	446,279	366,281
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	340,005	296,986	266,586
GOODWILL IMPAIRMENT			1,105
GAIN ON SALE OF ASSETS	(1,701)	(945)	(670)
Operating income	163,639	150,238	99,260
OTHER INCOME (EXPENSE):
Interest income	224	73	70
Interest expense	(9,317)	(3,710)	(3,156)
Changes in the fair value of contingent earn-out obligations	(2,991)	(2,066)	3,715
Other	187	4,141	1,049
Other income (expense)	(11,897)	(1,562)	1,678
INCOME BEFORE INCOME TAXES	151,742	148,676	100,938
PROVISION FOR INCOME TAXES	37,418	35,773	45,666
NET INCOME	$ 114,324	$ 112,903	$ 55,272
INCOME PER SHARE:
Basic (in shares)	$ 3.10	$ 3.03	$ 1.48
Diluted (in shares)	$ 3.08	$ 3.00	$ 1.47
SHARES USED IN COMPUTING INCOME PER SHARE:
Basic (in shares)	36,854	37,202	37,239
Diluted (in shares)	37,131	37,592	37,672
DIVIDENDS PER SHARE (in dollars per share)	$ 0.395	$ 0.330	$ 0.295

Detail of Certain Balance Sheet Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Activity in allowance for doubtful accounts
Balance at beginning of year	$ 5,898	$ 3,400	$ 4,288
Bad debt expense (benefit)	2,978	3,562	182
Deductions for uncollectible receivables written off, net of recoveries	(3,924)	(1,304)	(1,829)
Allowance for doubtful accounts of acquired companies at date of acquisition	1,955	240	759
Balance at end of year	6,907	5,898	$ 3,400
Other current liabilities
Accrued warranty costs	7,452	6,453
Current lease liability	14,016
Operating lease liability	86,713
Accrued job losses	2,226	1,495
Accrued sales and use tax	2,938	2,685
Deferred revenue	5,506	5,233
Liabilities due to former owners	11,219	2,045
Other current liabilities	38,273	14,941
Total other current liabilities	$ 81,630	$ 32,852

Segment Information (Details) $ in Thousands	3 Months Ended								12 Months Ended
Segment Information (Details) $ in Thousands	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segment Information
Number of reportable segments \| segment									2
Revenue	$ 719,584	$ 706,918	$ 650,302	$ 538,473	$ 588,359	$ 594,536	$ 535,043	$ 464,941	$ 2,615,277	$ 2,182,879	$ 1,787,922
Gross Profit	132,560	$ 142,702	$ 120,016	$ 106,665	118,175	$ 127,868	$ 111,183	$ 89,053	501,943	446,279	366,281
Capital Expenditures									31,750	27,268	35,467
Total Assets	1,505,012				1,062,564				1,505,012	1,062,564
Operating \| Mechanical Services
Segment Information
Revenue									2,251,560	2,176,223	1,787,922
Gross Profit									465,144	444,960	366,281
Capital Expenditures									27,933	25,945	34,587
Total Assets	1,056,609				970,995				1,056,609	970,995
Operating \| Electrical Services
Segment Information
Revenue									363,717	6,656
Gross Profit									36,799	1,319
Capital Expenditures									1,504	57
Total Assets	372,254				23,078				372,254	23,078
Corporate & Eliminations
Segment Information
Capital Expenditures									2,314	1,266	$ 880
Total Assets	$ 76,149				$ 68,491				$ 76,149	$ 68,491

Stockholders' Equity - Anti-Dilutive Stock Options (Details) - shares shares in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock Options \| Maximum
Earnings Per Share
Anti-dilutive securities excluded from computation of earnings per share amount (in shares)	0.1	0.1	0.1

Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Stock-Based Compensation

Stock-Based Compensation

13. Stock-Based Compensation

Grants of stock options, restricted stock and restricted stock units, and performance share units have been, under the 2012 Plan and under the 2017 Plan, determined and administered by the compensation committee of the Board of Directors. In 2019, the Board of Directors approved a change to the structure of long-term incentive grants to remove stock options, commencing with the March 2019 equity grant. Total stock-based compensation expense was $5.9 million, $7.2 million and $6.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. Stock-based compensation expense is recognized using the straight-line method over the vesting period and generally vests over a three-year vesting period. Certain awards provide for accelerated vesting when the sum of an employee's age and years of service is at least 75. We recognize forfeitures as they occur. Total income tax benefit recognized for stock-based compensation arrangements was $1.3 million, $1.5 million and $2.4 million for each of the years ended December 31, 2019, 2018 and 2017.

We generally issue treasury shares for stock options and restricted stock, unless treasury shares are not available. Upon the vesting of restricted shares, we have allowed the holder to elect to surrender an amount of shares to meet their statutory tax withholding requirements. These shares are accounted for as treasury stock based upon the value of the stock on the date of vesting.

Stock Options

The following table summarizes activity under our stock option plans (shares in thousands):


	Year Ended
	December 31,
	2019
		Weighted-
		Average
Stock Options	Shares	Exercise Price
Outstanding at beginning of year	499	$	25.65
Granted	—	$	—
Exercised	(114)	$	20.57
Forfeited	—	$	—
Expired	(3)	$	42.50
Outstanding at end of year	382	$	27.06
Options exercisable at end of year	301

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $3.5 million, $6.7 million and $3.6 million, respectively. Stock options exercisable as of December 31, 2019 have a weighted-average remaining contractual term of 5.3 years and an aggregate intrinsic value of $8.0 million. As of December 31, 2019, we have 0.4 million options that are vested or expected to vest; these options have a weighted average exercise price of $27.06 per share, have a weighted-average remaining contractual term of 5.8 years and an aggregate intrinsic value of $8.7 million.

The following table summarizes information about stock options outstanding at December 31, 2019 (shares in thousands):


	Options Outstanding				Options Exercisable
		Weighted-
		Average
	Number	Remaining	Weighted-		Number	Weighted-
	Outstanding at	Contractual	Average		Exercisable at	Average
Range of Exercise Prices	12/31/2019	Life	Exercise Price		12/31/2019	Exercise Price
$11.21 - $15.00	45	2.9	$	13.60	45	$	13.60
$15.01 - $35.00	200	5.1	$	21.47	200	$	21.47
$35.01 - $42.50	137	7.7	$	39.67	56	$	38.51
$11.21 - $42.50	382	5.8	$	27.06	301	$	23.45

The fair value of each option award is estimated, based on several assumptions, on the date of grant using the Black-Scholes option valuation model. We did not grant any options in 2019. The fair values and the assumptions used for the 2018 and 2017 grants are shown in the table below:


	Year Ended December 31,
	2018		2017
Weighted-average fair value per share of options granted	$	13.06	$	11.43
Fair value assumptions:
Expected dividend yield		0.79%		0.89%
Expected stock price volatility		31.7%		34.5%
Risk-free interest rate		2.66%		2.11%
Expected term		5.3 years		5.3 years

Stock options are accounted for as equity instruments. As of December 31, 2019, the unrecognized compensation cost related to stock options was $0.1 million, which is expected to be recognized over a weighted-average period of 1.0 year. The total fair value of options vested during the year ended December 31, 2019 was $0.9 million.

The following table summarizes information about nonvested stock option awards as of December 31, 2019 and changes for the year ended December 31, 2019 (shares in thousands):


		Weighted-Average
		Grant Date
Stock Options	Shares	Fair Value
Nonvested at December 31, 2018	163	$	11.99
Granted	—	$	—
Vested	(82)	$	11.46
Forfeited	—	$	—
Nonvested at December 31, 2019	81	$	12.53

Restricted Stock and Restricted Stock Units

The following table summarizes activity under our restricted stock plans (shares in thousands):


	Year Ended
	December 31,
	2019
		Weighted
		Average Grant
Restricted Stock and Restricted Stock Units	Shares	Date Fair Value
Unvested at beginning of year	78	$	38.17
Granted	87	$	51.02
Vested	(69)	$	41.58
Forfeited	(5)	$	44.01
Unvested at end of year	91	$	47.58

Approximately $0.9 million of compensation expense related to restricted stock and restricted stock units will be recognized over a weighted-average period of 1.9 years. The total fair value of shares vested during the year ended December 31, 2019 was $2.9 million. The weighted-average fair value per share of restricted stock shares and units awarded during 2019, 2018 and 2017 was $51.02, $44.02 and $35.69, respectively. The aggregate intrinsic value of restricted stock vested during the years ended December 31, 2019, 2018 and 2017 was $3.5 million, $3.3 million and $3.2 million, respectively.

Performance Stock Units

Under the 2012 Plan, we granted dollar-denominated performance vesting restricted stock units (“PSUs”), which cliff vest at the end of a three-year performance period. The PSUs are subject to two performance measures; 50% of the PSUs are based on the annual performance of our stock price relative to a group of our peers (total shareholder return) and 50% of the PSUs are measured based on meeting or exceeding a pre-determined annual earnings per share target as set by our Board of Directors (EPS). Depending on the Company’s performance in relation to the established performance measures, the awards may vest at zero to a maximum of 2.0 times the dollar-denominated award granted at target. Upon achievement of the necessary performance metrics, the award will be determined in dollars and may be settled in cash or stock based on the market price of the Company’s common stock at the end of the performance period, at our discretion.

Compensation expense for dollar-denominated performance units will ultimately be equal to the final dollar value awarded to the grantee upon vesting, settled either in cash or stock. However, throughout the performance period we must record and accrue expense based on an estimate of that future payout. For units determined by EPS performance, the awards are evaluated quarterly against established targets in order to estimate the liability throughout the vesting period. For units determined by total shareholder return performance, a Monte Carlo simulation model was used to estimate accruals throughout the vesting period. The model simulates our total shareholder return and compares it against our peer group over the three-year performance period to produce a predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the total shareholder return element. The calculated fair market value as of December 31, 2019 was $5.0 million. Of this amount, $1.9 million relates to the PSUs granted in 2017 whose performance period ended December 31, 2019. These awards will be settled within the upcoming year either in cash or stock. The expense related to performance stock units for the years ended December 31, 2019, 2018 and 2017 was $1.9 million, $2.9 million and $2.6 million, respectively. At the December 31, 2019 calculated fair market value, approximately $0.4 million of compensation expense related to performance stock units will be recognized over a weighted-average period of 1.4 years.

Debt Obligations - Future Payments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Future principal payments of long-term debt
2020	$ 20,817
2021	17,666
2022	27,500
2023	27,500
2024	22,500
Thereafter	110,500
Total debt	226,483
Interest expense
Interest expense on notes to former owners	1,531	$ 642	$ 365
Interest expense on borrowings and unused commitment fees	6,887	2,211	1,862
Letter of credit fees	512	474	553
Amortization of debt financing costs	387	383	376
Total	$ 9,317	$ 3,710	$ 3,156

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property and Equipment

Schedule of components of property and equipment

Property and equipment consist of the following (dollars in thousands):


	Estimated
	Useful Lives	December 31,
	in Years	2019		2018
Land	—	$	6,206	$	5,702
Transportation equipment	1 - 7		106,972		98,898
Machinery and equipment	1 - 20		35,575		33,907
Computer and telephone equipment	1 - 10		20,744		20,179
Buildings and leasehold improvements	1 - 40		62,301		53,559
Furniture and fixtures	1 - 17		5,244		4,879
Construction in progress	—		2,123		1,715
			239,165		218,839
Less—Accumulated depreciation			(129,369)		(119,221)
Property and equipment, net		$	109,796	$	99,618

Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

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

●

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

●

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

●

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


	Fair Value Measurements at December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	50,788	$	—	$	—	$	50,788
Life insurance—cash surrender value	$	—	$	3,905	$	—	$	3,905
Contingent earn-out obligations	$	—	$	—	$	28,497	$	28,497

	Fair Value Measurements at December 31, 2018
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	45,620	$	—	$	—	$	45,620
Life insurance—cash surrender value	$	—	$	3,252	$	—	$	3,252
Contingent earn-out obligations	$	—	$	—	$	7,375	$	7,375

Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short-term maturity. The Company’s outstanding term loan held by third-party financial institutions is carried at cost, adjusted for debt issuance costs. The Company’s term loan is not publicly traded and the carrying amount approximates fair value as the loan accrues interest at a variable rate. The carrying value of our borrowings associated with the Revolving Credit Facility approximate its fair value due to the variable rate on such debt.

We have life insurance policies covering 65 employees with a combined face value of $50.6 million. The policies are invested in several investment vehicles, and the fair value measurement of the cash surrender balance associated with these policies is determined using Level 2 inputs within the fair value hierarchy and will vary with investment performance. The cash surrender value of these policies was $3.9 million as of December 31, 2019 and $3.3 million as of December 31, 2018. These assets are included in “Other Noncurrent Assets” in our consolidated Balance Sheets.

We value contingent earn-out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. The contingent earn-out obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

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


	December 31,
	2019		2018
Balance at beginning of year	$	7,375	$	7,993
Issuances		19,500		4,366
Settlements		(1,369)		(7,050)
Adjustments to fair value		2,991		2,066
Balance at end of year	$	28,497	$	7,375

We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. No goodwill or other intangible asset impairments were recorded during the years ended December 31, 2019 and 2018. During the year ended December 31, 2017, we recorded a goodwill impairment charge of $1.1 million based on Level 3 measurements. We did not recognize any other impairments on those assets required to be measured at fair value on a nonrecurring basis. See Note 5 “Goodwill and Identifiable Intangible Assets, Net” for further discussion.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Goodwill and Identifiable Intangible Assets, Net

12 Months Ended

Dec. 31, 2019

Goodwill and Identifiable Intangible Assets, Net

Goodwill and Identifiable Intangible Assets, Net

5. Goodwill and Identifiable Intangible Assets, Net

Goodwill

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


	Mechanical Services		Electrical Services
	Segment		Segment		Total
Balance at December 31, 2017	$	200,584	$	—	$	200,584
Acquisitions and purchase price adjustments (See Note 4)		34,598		—		34,598
Impairment adjustment		—		—		—
Balance at December 31, 2018		235,182		—		235,182
Acquisitions and purchase price adjustments (See Note 4)		579		96,686		97,265
Impact of segment reorganization		(1,101)		1,101		—
Impairment adjustment		—		—		—
Balance at December 31, 2019	$	234,660	$	97,787	$	332,447

The aggregate goodwill balance as of December 31, 2019 and 2018 includes $116.6 million of accumulated impairment charges, all of which relate to the mechanical services segment.

We perform our annual impairment testing on October 1, or more frequently, if events and circumstances indicate impairment may have occurred. As discussed in Note 2, “Summary of Significant Accounting Policies,” we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value.

During our annual impairment testing on October 1, 2019, we performed a quantitative assessment where the fair value of each reporting unit was estimated using a discounted cash flow model combined with a market valuation approach. We assigned a weighting of 50% to the discounted cash flow analysis and 50% to the public company approach for the year ended December 31, 2019. Based on this assessment, we concluded that the fair value of each of the reporting units was greater than its carrying value.

During 2018, we performed a qualitative assessment for each reporting unit, which considered various factors, including changes in the carrying value of the reporting unit, forecasted operating results, long-term growth rates and discount rates. Additionally, we considered qualitative key events and circumstances (i.e. macroeconomic environment, industry and market specific conditions, cost factors and events specific to the reporting unit, etc.). Based on this assessment, we concluded that it was more likely than not that the fair value of each of the reporting units was greater than its carrying value. Accordingly, no further testing was required.

We recorded a goodwill impairment charge of $1.1 million during the first quarter of 2017. Based on changes to our market strategy that occurred in March 2017 related to our California reporting unit (which was subsequently sold in the third quarter of 2019), we reevaluated our projected future earnings for this operating location and determined that we could no longer support the related goodwill balance and therefore the goodwill associated with this location was fully impaired. The fair value was estimated using a discounted cash flow model. The annual impairment test did not identify any additional impairment for 2017.

There are significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, it is possible that a material change could occur. If actual results are not consistent with our current estimates and assumptions, or the current economic outlook worsens, goodwill impairment charges may be recorded in future periods.

Identifiable Intangible Assets, Net

Identifiable intangible assets consist of the following (dollars in thousands):


		December 31,
	Estimated	2019				2018
	Useful Lives	Gross Book		Accumulated		Gross Book		Accumulated
	in Years	Value		Amortization		Value		Amortization
Customer relationships	1 - 15	$	183,061	$	(80,813)	$	128,480	$	(60,731)
Backlog	1 - 2		7,400		(6,388)		9,100		(8,260)
Tradenames	2 - 25		71,995		(15,281)		39,395		(12,709)
Total		$	262,456	$	(102,482)	$	176,975	$	(81,700)

The amounts attributable to customer relationships and tradenames are amortized to “Selling, General and Administrative Expenses” based upon the estimated consumption of their economic benefits, or a straight-line method over periods from one to twenty-five years if the pattern of economic benefit cannot otherwise be reliably estimated. The amounts attributable to backlog are being amortized to “Cost of Services” on a proportionate method over the remaining backlog period. Amortization expense for the years ended December 31, 2019, 2018 and 2017 was $27.1 million, $20.1 million and $17.4 million, respectively.

At December 31, 2019, future amortization expense of identifiable intangible assets is as follows (in thousands):


Year ended December 31—
2020	$	23,246
2021		19,191
2022		16,545
2023		15,082
2024		13,732
Thereafter		72,178
Total	$	159,974

Debt Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Obligations
Total principal amount	$ 226,483	$ 76,918
Less-unamortized debt issuance costs	(348)
Total long-term portion of debt	226,135	76,918
Less-current portion	20,817	3,279
Total long-term portion of debt, net	205,318	73,639
Revolving credit facility
Debt Obligations
Total principal amount	28,000	50,000
Term loan
Debt Obligations
Total principal amount	150,000
Notes to former owners
Debt Obligations
Outstanding balance	$ 48,483	26,813
Other debt
Debt Obligations
Total principal amount		$ 105

Summary of Significant Accounting Policies - Risk (Details)	12 Months Ended
	Dec. 31, 2019
Warranty Costs
Labor warranty period after servicing of existing MEP system	30 days
Revenue \| Customer concentration \| Minimum
Warranty Costs
Single customer, percentage of revenue	5.00%

Detail of Certain Balance Sheet Accounts (Tables)

12 Months Ended

Dec. 31, 2019

Detail of Certain Balance Sheet Accounts

Schedule of activity in allowance for doubtful accounts

Activity in our allowance for doubtful accounts consists of the following (in thousands):


	December 31,
	2019		2018		2017
Balance at beginning of year	$	5,898	$	3,400	$	4,288
Bad debt expense (benefit)		2,978		3,562		182
Deductions for uncollectible receivables written off, net of recoveries		(3,924)		(1,304)		(1,829)
Allowance for doubtful accounts of acquired companies at date of acquisition		1,955		240		759
Balance at end of year	$	6,907	$	5,898	$	3,400

Schedule of other current liabilities

Other current liabilities consist of the following (in thousands):


	December 31,
	2019		2018
Accrued warranty costs	$	7,452	$	6,453
Current lease liability		14,016		—
Accrued job losses		2,226		1,495
Accrued sales and use tax		2,938		2,685
Deferred revenue		5,506		5,233
Liabilities due to former owners		11,219		2,045
Other current liabilities		38,273		14,941
	$	81,630	$	32,852

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property and equipment
Property and equipment, gross	$ 239,165	$ 218,839
Less-Accumulated depreciation	(129,369)	(119,221)
Property and equipment, net	109,796	99,618
Depreciation expense	24,500	22,600	$ 20,100
Land
Property and equipment
Property and equipment, gross	6,206	5,702
Transportation equipment
Property and equipment
Property and equipment, gross	$ 106,972	98,898
Transportation equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Transportation equipment \| Maximum
Property and equipment
Estimated useful life	7 years
Machinery and equipment
Property and equipment
Property and equipment, gross	$ 35,575	33,907
Machinery and equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Machinery and equipment \| Maximum
Property and equipment
Estimated useful life	20 years
Computer and telephone equipment
Property and equipment
Property and equipment, gross	$ 20,744	20,179
Computer and telephone equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Computer and telephone equipment \| Maximum
Property and equipment
Estimated useful life	10 years
Buildings and leasehold improvements
Property and equipment
Property and equipment, gross	$ 62,301	53,559
Buildings and leasehold improvements \| Minimum
Property and equipment
Estimated useful life	1 year
Buildings and leasehold improvements \| Maximum
Property and equipment
Estimated useful life	40 years
Furniture and fixtures
Property and equipment
Property and equipment, gross	$ 5,244	4,879
Furniture and fixtures \| Minimum
Property and equipment
Estimated useful life	1 year
Furniture and fixtures \| Maximum
Property and equipment
Estimated useful life	17 years
Construction in progress
Property and equipment
Property and equipment, gross	$ 2,123	$ 1,715

Goodwill and Identifiable Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Identifiable Intangible Assets, Net

Schedule of changes in the carrying amount of goodwill

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


	Mechanical Services		Electrical Services
	Segment		Segment		Total
Balance at December 31, 2017	$	200,584	$	—	$	200,584
Acquisitions and purchase price adjustments (See Note 4)		34,598		—		34,598
Impairment adjustment		—		—		—
Balance at December 31, 2018		235,182		—		235,182
Acquisitions and purchase price adjustments (See Note 4)		579		96,686		97,265
Impact of segment reorganization		(1,101)		1,101		—
Impairment adjustment		—		—		—
Balance at December 31, 2019	$	234,660	$	97,787	$	332,447

Schedule of components of identifiable intangible assets

Identifiable intangible assets consist of the following (dollars in thousands):


		December 31,
	Estimated	2019				2018
	Useful Lives	Gross Book		Accumulated		Gross Book		Accumulated
	in Years	Value		Amortization		Value		Amortization
Customer relationships	1 - 15	$	183,061	$	(80,813)	$	128,480	$	(60,731)
Backlog	1 - 2		7,400		(6,388)		9,100		(8,260)
Tradenames	2 - 25		71,995		(15,281)		39,395		(12,709)
Total		$	262,456	$	(102,482)	$	176,975	$	(81,700)

Schedule of future amortization expense of identifiable intangible assets

At December 31, 2019, future amortization expense of identifiable intangible assets is as follows (in thousands):


Year ended December 31—
2020	$	23,246
2021		19,191
2022		16,545
2023		15,082
2024		13,732
Thereafter		72,178
Total	$	159,974

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 114,324	$ 112,903	$ 55,272
Adjustments to reconcile net income to net cash provided by operating activities-
Amortization of identifiable intangible assets	27,082	20,089	17,404
Depreciation expense	24,490	22,600	20,052
Change in right-of-use assets	16,887
Goodwill impairment			1,105
Bad debt expense	2,978	3,562	182
Deferred tax provision (benefit)	(4,251)	4,456	4,178
Amortization of debt financing costs	387	383	376
Gain on sale of assets	(1,701)	(945)	(670)
Changes in the fair value of contingent earn-out obligations	2,991	2,066	(3,715)
Stock-based compensation	5,878	7,161	6,377
(Increase) decrease in-
Receivables, net	(49,508)	(68,621)	(37,799)
Inventories	2,366	(1,538)	(584)
Prepaid expenses and other current assets	(15,519)	519	2,467
Costs and estimated earnings in excess of billings and unbilled accounts receivable	(4,312)	(14,444)	1,869
Other noncurrent assets	(735)	(114)	1,005
Increase (decrease) in-
Accounts payable and accrued liabilities	31,046	47,871	22,068
Billings in excess of costs and estimated earnings	4,376	16,786	13,265
Other long-term liabilities	(14,751)	(5,544)	11,238
Net cash provided by operating activities	142,028	147,190	114,090
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(31,750)	(27,268)	(35,467)
Proceeds from sales of property and equipment	2,159	1,698	1,359
Proceeds from sale of business	1,611
Cash paid for acquisitions, net of cash acquired	(196,470)	(70,140)	(94,860)
Net cash used in investing activities	(224,450)	(95,710)	(128,968)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit	356,000	124,000	177,000
Payments on revolving line of credit	(228,000)	(119,000)	(132,000)
Payments on other debt	(3,784)	(1,127)	(835)
Payments on capital lease obligations			(256)
Debt financing costs	(1,405)	(844)
Payments of dividends to stockholders	(14,543)	(12,268)	(10,987)
Share repurchase	(19,550)	(28,533)	(9,007)
Shares received in lieu of tax withholding	(1,498)	(1,540)	(1,419)
Proceeds from exercise of options	2,350	3,105	2,052
Deferred acquisition payments	(637)	(750)	(2,802)
Payments for contingent consideration arrangements	(1,343)	(5,445)	(2,400)
Net cash provided by (used in) financing activities	87,590	(42,402)	19,346
NET INCREASE IN CASH AND CASH EQUIVALENTS	5,168	9,078	4,468
CASH AND CASH EQUIVALENTS, beginning of period	45,620	36,542	32,074
CASH AND CASH EQUIVALENTS, end of period	$ 50,788	$ 45,620	$ 36,542

Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue
Revenue	$ 2,615,277	$ 2,182,879
Percentage of revenue from contract with customer (as a percent)	100.00%	100.00%
Industrial
Disaggregation of Revenue
Revenue	$ 886,668	$ 596,557
Percentage of revenue from contract with customer (as a percent)	33.90%	27.30%
Education
Disaggregation of Revenue
Revenue	$ 412,318	$ 391,937
Percentage of revenue from contract with customer (as a percent)	15.80%	18.00%
Office Buildings
Disaggregation of Revenue
Revenue	$ 348,640	$ 288,090
Percentage of revenue from contract with customer (as a percent)	13.30%	13.20%
Healthcare
Disaggregation of Revenue
Revenue	$ 358,155	$ 319,958
Percentage of revenue from contract with customer (as a percent)	13.70%	14.70%
Government
Disaggregation of Revenue
Revenue	$ 162,507	$ 143,958
Percentage of revenue from contract with customer (as a percent)	6.20%	6.60%
Retail, Restaurants and Entertainment
Disaggregation of Revenue
Revenue	$ 248,083	$ 225,348
Percentage of revenue from contract with customer (as a percent)	9.50%	10.30%
Multi-Family and Residential
Disaggregation of Revenue
Revenue	$ 104,693	$ 136,075
Percentage of revenue from contract with customer (as a percent)	4.00%	6.20%
Other
Disaggregation of Revenue
Revenue	$ 94,213	$ 80,956
Percentage of revenue from contract with customer (as a percent)	3.60%	3.70%
New Construction
Disaggregation of Revenue
Revenue	$ 1,201,122	$ 829,978
Percentage of revenue from contract with customer (as a percent)	45.90%	38.00%
Existing Building Construction
Disaggregation of Revenue
Revenue	$ 793,159	$ 796,946
Percentage of revenue from contract with customer (as a percent)	30.30%	36.50%
Service Projects
Disaggregation of Revenue
Revenue	$ 231,228	$ 206,506
Percentage of revenue from contract with customer (as a percent)	8.90%	9.50%
Service Calls, Maintenance and Monitoring
Disaggregation of Revenue
Revenue	$ 389,768	$ 349,449
Percentage of revenue from contract with customer (as a percent)	14.90%	16.00%
Mechanical Services
Disaggregation of Revenue
Revenue	$ 2,251,560	$ 2,176,223
Percentage of revenue from contract with customer (as a percent)	86.10%	99.70%
Electrical Services
Disaggregation of Revenue
Revenue	$ 363,717	$ 6,656
Percentage of revenue from contract with customer (as a percent)	13.90%	0.30%
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Disaggregation of Revenue
Revenue			$ 1,787,922
Percentage of revenue from contract with customer (as a percent)			100.00%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Industrial
Disaggregation of Revenue
Revenue			$ 395,362
Percentage of revenue from contract with customer (as a percent)			22.10%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Education
Disaggregation of Revenue
Revenue			$ 351,808
Percentage of revenue from contract with customer (as a percent)			19.70%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Office Buildings
Disaggregation of Revenue
Revenue			$ 248,604
Percentage of revenue from contract with customer (as a percent)			13.90%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Healthcare
Disaggregation of Revenue
Revenue			$ 224,643
Percentage of revenue from contract with customer (as a percent)			12.60%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Government
Disaggregation of Revenue
Revenue			$ 140,843
Percentage of revenue from contract with customer (as a percent)			7.90%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Retail, Restaurants and Entertainment
Disaggregation of Revenue
Revenue			$ 223,593
Percentage of revenue from contract with customer (as a percent)			12.50%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Multi-Family and Residential
Disaggregation of Revenue
Revenue			$ 116,844
Percentage of revenue from contract with customer (as a percent)			6.50%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Other
Disaggregation of Revenue
Revenue			$ 86,225
Percentage of revenue from contract with customer (as a percent)			4.80%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| New Construction
Disaggregation of Revenue
Revenue			$ 684,687
Percentage of revenue from contract with customer (as a percent)			38.30%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Existing Building Construction
Disaggregation of Revenue
Revenue			$ 580,737
Percentage of revenue from contract with customer (as a percent)			32.40%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Service Projects
Disaggregation of Revenue
Revenue			$ 197,703
Percentage of revenue from contract with customer (as a percent)			11.10%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Service Calls, Maintenance and Monitoring
Disaggregation of Revenue
Revenue			$ 324,795
Percentage of revenue from contract with customer (as a percent)			18.20%
Calculated under Revenue Guidance in Effect before Topic 606 [Member] \| Mechanical Services
Disaggregation of Revenue
Revenue			$ 1,787,922
Percentage of revenue from contract with customer (as a percent)			100.00%

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2019

Stockholders' Equity

Reconciliation of number of shares outstanding with the number of shares used in computing basic and diluted earnings per share

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



	Year Ended December 31,
	2019	2018	2017
Common shares outstanding, end of period	36,658	36,894	37,187
Effect of using weighted average common shares outstanding	196	308	52
Shares used in computing earnings per share—basic	36,854	37,202	37,239
Effect of shares issuable under stock option plans based on the treasury stock method	204	283	316
Effect of restricted and contingently issuable shares	73	107	117
Shares used in computing earnings per share—diluted	37,131	37,592	37,672

Summary of Significant Accounting Policies - Remaining Performance Obligations (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Remaining Performance Obligations
The term of the renewable service maintenance agreements (in years)	1 year
Practical Expedient	true
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Remaining Performance Obligations
Remaining performance obligations	$ 1,600
Expected percentage of remaining performance obligations	85.00%
Expected timing of performance obligations	12 months

Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets-
Accounts receivable and allowance for doubtful accounts	$ 1,660	$ 1,445
Stock-based compensation	2,561	2,538
Accrued liabilities and expenses	25,569	19,449
Lease liabilities	20,873
Net operating loss carryforwards	2,750	3,242
Intangible assets	7,988	5,071
Other	525	550
Subtotal	61,926	32,295
Valuation allowances	(369)	(648)
Total deferred tax assets	61,557	31,647
Deferred tax liabilities-
Property and equipment	(11,286)	(10,488)
Lease right-of-use asset	(20,873)
Long-term contracts	(876)	(688)
Goodwill	(6,020)	(3,864)
Other	(2,004)	(360)
Total deferred tax liabilities	(41,059)	(15,400)
Net deferred tax assets	20,498	16,247
Deferred income tax assets
Deferred tax assets	21,923	17,634
Deferred income tax liabilities
Deferred tax liabilities	$ 1,425	$ 1,387

Business and Organization (Details)	12 Months Ended
Business and Organization (Details)	Dec. 31, 2019
Installation of systems in newly constructed facilities
Business and Organization
Percentage of revenue attributable to services	45.90%
Maintenance, repair and replacement services
Business and Organization
Percentage of revenue attributable to services	54.10%

Acquisitions - Contingent Earn-out Obligation (Details) - Walker $ in Millions	Apr. 01, 2019 USD ($)
Business Acquisition [Line Items]
Contingent earn-out period	5 years
Contingent earn-out estimated milestone payment, minimum	$ 1
Contingent earn-out estimated milestone payment, maximum	$ 11
Cash flow discount rate	10.20%

Debt Obligations - Other (Details) $ in Thousands				12 Months Ended
Debt Obligations - Other (Details) $ in Thousands	Dec. 31, 2019 USD ($) item	Dec. 20, 2019 USD ($)	Dec. 19, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Debt Obligations
Financing and professional cost				$ 1,405	$ 844
Outstanding balance	$ 226,483			226,483	76,918
Reconciliation of Credit Facility Adjusted EBITDA to net income
Net income				114,324	112,903	$ 55,272
Provision for income taxes				37,418	35,773	45,666
Stock-based compensation				$ 5,878	7,161	$ 6,377
Principal financial covenants
Fixed charge coverage ratio	2.00			2.00
Revolving credit facility
Debt Obligations
Borrowing capacity		$ 450,000
Payments of financing costs line of credit arrangements	$ 1,000
Outstanding borrowings	28,000			$ 28,000
Outstanding balance	28,000			28,000	50,000
Letters of credit amount outstanding	40,900			40,900
Credit available	381,100			381,100
Book value of assets pledged as collateral	$ 58,200			$ 58,200
Number of quarters of net earnings used for the calculation of the credit facility adjusted EBITDA \| item				4
Reconciliation of Credit Facility Adjusted EBITDA to net income
Net income				$ 114,324
Provision for income taxes				37,418
Interest expense, net				9,093
Depreciation and amortization expense				51,572
Stock-based compensation				5,878
Pre-acquisition results of acquired companies, as defined under the Facility				(1,404)
Credit Facility Adjusted EBITDA				$ 219,689
Principal financial covenants
Number of interest rate options \| item				2
Leverage ratio	1.0			1.0
Fixed charge coverage ratio	11.3			11.3
Period of Credit Facility Adjusted EBITDA for determining additional margins				12 months
Additional per annum interest margin added under:
Weighted average interest rate (as a percent)	3.20%			3.20%
Revolving credit facility \| Through maturity
Principal financial covenants
Leverage ratio	3.00			3.00
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00
Additional per annum interest margin added under:
Letter of credit fees (as a percent)				1.25%
Commitment fees payable on unused portion of the facility (as a percent)				0.20%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75
Additional per annum interest margin added under:
Letter of credit fees (as a percent)				1.50%
Commitment fees payable on unused portion of the facility (as a percent)				0.25%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50
Additional per annum interest margin added under:
Letter of credit fees (as a percent)				1.75%
Commitment fees payable on unused portion of the facility (as a percent)				0.30%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater
Additional per annum interest margin added under:
Letter of credit fees (as a percent)				2.00%
Commitment fees payable on unused portion of the facility (as a percent)				0.35%
Revolving credit facility \| Minimum
Principal financial covenants
Fixed charge coverage ratio	1.50			1.50
Revolving credit facility \| Minimum \| Covenant Requirement
Principal financial covenants
Net leverage ratio used as basis for other restrictions	2.50			2.50
Revolving credit facility \| Maximum
Principal financial covenants
Permitted amount of acquisitions per transaction	$ 5,000			$ 5,000
Aggregate purchase price of current acquisition and acquisitions in the preceding 12 month period for determining permitted amount of acquisition per transaction	10,000			$ 10,000
Revolving credit facility \| Base Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				0.25%
Revolving credit facility \| Base Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				0.50%
Revolving credit facility \| Base Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				0.75%
Revolving credit facility \| Base Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				1.00%
Revolving credit facility \| Eurodollar Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				1.25%
Revolving credit facility \| Eurodollar Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				1.50%
Revolving credit facility \| Eurodollar Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				1.75%
Revolving credit facility \| Eurodollar Rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				2.00%
Amended senior revolving credit facility
Debt Obligations
Borrowing capacity		600,000	$ 400,000
Line of credit borrowing capacity accordion option		150,000
Unamortized costs			$ 1,300
Financing and professional cost	1,400
Term loan
Debt Obligations
Borrowing capacity		$ 150,000
Repayment in terms of percentage of original aggregate principal amount		3.75%	1.25%
Payments of financing costs term loan	400
Outstanding balance	$ 150,000			$ 150,000
Additional per annum interest margin added under:
Weighted average interest rate (as a percent)	3.30%			3.30%
Notes to former owners
Other disclosures
Cumulative number of companies acquired \| item	6			6
Outstanding balance	$ 48,483			$ 48,483	26,813
Promissory note \| Walker
Other disclosures
Outstanding balance	$ 25,000			$ 25,000
Stated interest rate (as a percent)	4.00%			4.00%
Promissory note \| BCH
Other disclosures
Outstanding balance	$ 14,300			$ 14,300
Weighted average interest rate (as a percent)	3.00%			3.00%
Promissory note \| Four Immaterial Acquisition
Other disclosures
Outstanding balance	$ 9,200			$ 9,200
Promissory note \| Minimum \| Five Immaterial Acquisition
Other disclosures
Weighted average interest rate (as a percent)	2.90%			2.90%
Promissory note \| Maximum \| Five Immaterial Acquisition
Other disclosures
Weighted average interest rate (as a percent)	3.50%			3.50%
Letter of Credit
Debt Obligations
Borrowing capacity		$ 160,000
Other debt
Debt Obligations
Outstanding balance					$ 105
Federal Funds Rate \| Revolving credit facility \| Base Rate
Market rates relating to interest options
Market rate (as a percent)	2.05%			2.05%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				0.50%
Wells Fargo Bank, N.A. Prime Rate \| Revolving credit facility \| Base Rate
Market rates relating to interest options
Market rate (as a percent)	4.75%			4.75%
One-month LIBOR \| Revolving credit facility \| Base Rate
Market rates relating to interest options
Market rate (as a percent)	2.76%			2.76%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)				1.00%
One-month LIBOR \| Revolving credit facility \| Eurodollar Rate
Market rates relating to interest options
Variable rate basis				One-month LIBOR
Market rate (as a percent)	1.76%			1.76%
Six-month LIBOR \| Revolving credit facility \| Eurodollar Rate
Market rates relating to interest options
Variable rate basis				Six-month LIBOR
Market rate (as a percent)	1.91%			1.91%

Acquisitions

12 Months Ended

Dec. 31, 2019

Acquisitions

Acquisitions

4. Acquisitions

Walker Acquisition

On April 1, 2019, we acquired all of the issued and outstanding equity interests of Walker TX Holding Company, LLC and each of its wholly owned subsidiaries (collectively “Walker”). Walker is a full-service electrical contracting and network infrastructure engineering business serving commercial and industrial clients with headquarters in Irving, Texas and operations throughout the state of Texas. As a result of the acquisition, Walker is a wholly owned subsidiary of the Company reported in our electrical services segment. Revenue attributable to Walker was $343.2 million for the nine months from the acquisition date.


Consideration transferred:
Cash paid at closing	$	178,000
Advance to former owners		20,500
Working capital adjustment		(7,809)
Notes issued to former owners		25,000
Tax equalization payment		202
Estimated fair value of contingent earn-out payments		19,500
	$	235,393
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	4,850
Billed and unbilled accounts receivable		92,309
Other current assets		8,225
Other long-term assets		53
Property and equipment		4,970
Goodwill		96,686
Identifiable intangible assets		90,200
Lease right-of-use asset		9,195
Accounts payable		(20,220)
Accrued compensation and benefits		(974)
Billings in excess of costs and estimated earnings		(31,553)
Other current liabilities		(11,205)
Long-term lease liabilities		(7,143)
	$	235,393

The allocation of the purchase price to the assets acquired and liabilities assumed is preliminary and, therefore, subject to change pending the completion of the final valuation of intangible assets and accrued liabilities. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. All of the goodwill recognized as a result of this transaction is tax deductible.

In estimating the fair value of the acquired intangible assets, we utilized the valuation methodology determined to be the most appropriate for the individual intangible asset. In order to estimate the fair value of the backlog and customer relationships, we utilized an excess earnings methodology, which consisted of the projected cash flows attributable to these assets discounted to present value using a risk-adjusted discount rate that represented the required rate of return. The trade name value was determined based on the relief-from-royalty method, which applies a royalty rate to the revenue stream attributable to this asset, and the resulting royalty payment is tax effected and discounted to present value. Some of the more significant estimates and assumptions inherent in determining the fair value of the identifiable intangible assets are associated with forecasting cash flows and profitability, which represent Level 3 inputs. The primary assumptions used were generally based upon the present value of anticipated cash flows discounted at rates ranging from 8.5%-11.5%. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class.

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


	Valuation Method	Estimated Useful Life		Estimated Fair Value
Backlog	Excess earnings	2 years	$	4,600
Trade Names	Relief-from-royalty	25 years		32,600
Customer Relationships	Excess earnings	10 years		53,000
Total			$	90,200

The contingent earn-out obligation is associated with the achievement of specified earnings milestones over a five year period, and the range of estimated milestone payments is from $1 million to $11 million (undiscounted). We determined the initial fair value of the contingent earn-out obligation based on the Monte Carlo Simulation method, which represents a Level 3 measurement. Cash flows were discounted using a 10.2% discount rate, which we believe is appropriate and representative of a market participant assumption. Subsequent to the acquisition date, the contingent earn-out obligation is re-measured at fair value each reporting period. Changes in the estimated fair value of the contingent payments subsequent to the acquisition date are recognized immediately in earnings.

Pro Forma Impact of the Acquisition

The following unaudited pro forma information presents the consolidated results of the Company and Walker for the twelve months ended December 31, 2019 and 2018, with adjustments to give effect to pro forma events that are directly attributable to the acquisition and have a continuing impact. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods or the results of operations that actually would have been realized had the entities been a single company during the periods presented or the results that the company will experience after the acquisition. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any operating efficiencies that may be associated with the acquisition.

The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2018, are as follows (in thousands):


	Year Ended December 31,
	2019		2018
Revenue	$	2,703,638	$	2,574,206
Pre-tax income	$	152,136	$	143,473

Pro forma pre-tax income in 2018 includes compensation expenses of approximately $9.6 million of Walker’s former owners under terms that are not included in their post-transaction employment agreements.

Other Acquisitions

In addition to the Walker acquisition, we completed one acquisition in the first quarter of 2019 and one acquisition in the second quarter of 2019 with a total preliminary purchase price of $2.6 million for the year ended December 31, 2019. We completed two acquisitions in the third quarter of 2018, three acquisitions in the second quarter of 2018 and two acquisitions in the first quarter of 2018, with a total purchase price of $96.4 million for the year ended December 31, 2018. One acquisition completed in the third quarter of 2018 reports as a separate operating location and the remainder were “tucked-in” with existing operations. Our consolidated Balance Sheet includes preliminary allocations of the purchase price to the assets acquired and liabilities assumed pending the completion of the final valuation of intangible assets and accrued liabilities.

In the second quarter of 2017, we acquired all of the issued and outstanding stock of BCH Holdings, Inc. and each of its wholly-owned subsidiaries (collectively “BCH”) for $121.3 million of which $97.0 million was allocated to goodwill and identifiable intangible assets. The total purchase price included $95.4 million in cash, $14.3 million in notes payable to former owners and an $11.6 million contingent earn-out obligation. BCH is an integrated, single-source provider of mechanical service, maintenance and construction with headquarters in Tampa, Florida and operations throughout the southeastern region of the United States, which reports as a separate operating location. In addition to the BCH acquisition, we completed four additional acquisitions in 2017. The total purchase price for these additional acquisitions, including earn-outs, was $9.4 million.

The results of operations of acquisitions are included in our consolidated financial statements from their respective acquisition dates. The acquisitions completed in the current and prior year were not material, individually or in the aggregate. Additional contingent purchase price (“earn-out”) has been or will be paid if certain acquisitions achieve predetermined profitability targets. Such earn-outs, when they are not subject to the continued employment of the sellers, are estimated as of the purchase date and included as part of the consideration paid for the acquisition. If we have an earn-out where continued employment is a condition to receive payment, then the earn-out is recorded as compensation expense over the period earned.

Summary of Significant Accounting Policies - Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash paid for:
Interest	$ 8,817	$ 3,743	$ 2,832
Income taxes	$ 45,288	$ 33,401	$ 38,144

Commitments and Contingencies - Self-Insurance (Details)	Dec. 31, 2019 USD ($) item
Self-Insurance
Amount of loss fully insured above per-incident deductible amount	$ 125,000,000.0
Amount of excess loss insurance covered	125,000,000.0
Workers' Compensation
Self-Insurance
Per incident deductible amount	250,000,000,000
Amount of loss fully insured above per-incident deductible amount	250,000,000,000
Employer's Liability
Self-Insurance
Per incident deductible amount	250,000,000,000
Employer's Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	125,000,000.0
General Liability
Self-Insurance
Per incident deductible amount	250,000,000,000
Amount of loss fully insured above per-incident deductible amount	7,500,000
General Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	125,000,000.0
Auto Liability
Self-Insurance
Per incident deductible amount	250,000,000,000
Amount of loss fully insured above per-incident deductible amount	7,500,000
Auto Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	$ 125,000,000.0
Employee Medical
Self-Insurance
Number of medical plans \| item	3
Employee Medical - Plan One
Self-Insurance
Per person, per policy deductible amount	$ 350,000
Employee Medical - Plan Two
Self-Insurance
Per person, per policy deductible amount	350,000
Employee Medical - Plan Three
Self-Insurance
Per incident deductible amount	$ 350,000

Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 01, 2018	Sep. 30, 2019	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes
Effective tax rates on continuing operations				24.70%	24.10%	45.20%
Federal statutory income tax rate (as a percent)	21.00%			21.00%	21.00%	35.00%
Income taxes at the federal statutory rate of 35%				$ 31,866	$ 31,222	$ 35,328
Increases (decreases) resulting from-
Net state income taxes				6,644	7,470	2,838
Valuation allowances				(279)	(2,852)	91
Net unrecognized tax benefits				7,338	(15)	153
Nondeductible expenses				2,180	1,926	1,134
R&D tax credits		$ (4,600)		(4,569)	(2,726)
179D deduction				(5,126)
Net operating loss carryforwards					2,225
Stock-based compensation deductions				(714)	(1,293)	(1,320)
Domestic production activities deduction						(2,112)
Corporate tax rate reduction to 21%						9,478
Other				78	(184)	76
Provision for income taxes				37,418	$ 35,773	$ 45,666
Increase to provision for income taxes			$ 2,800
179D deduction				$ (2,200)

Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2019

Debt Obligations

Schedule of components of debt obligations

Debt obligations consist of the following (in thousands):


	December 31,
	2019		2018
Revolving credit facility	$	28,000	$	50,000
Term loan		150,000		—
Notes to former owners		48,483		26,813
Other debt		—		105
Total principal amount		226,483		76,918
Less—unamortized debt issuance costs		(348)		—
Total debt, net of unamortized debt issuance costs		226,135		76,918
Less—current portion		(20,817)		(3,279)
Total long-term portion of debt, net	$	205,318	$	73,639

Schedule of future principal payments of long-term debt

At December 31, 2019, future principal payments of debt are as follows (in thousands):


Year ended December 31—
2020	$	20,817
2021		17,666
2022		27,500
2023		27,500
2024		22,500
Thereafter		110,500
	$	226,483

Schedule of interest expense

Interest expense included the following primary elements (in thousands):


	Year Ended December 31,
	2019		2018		2017
Interest expense on notes to former owners	$	1,531	$	642	$	365
Interest expense on borrowings and unused commitment fees		6,887		2,211		1,862
Letter of credit fees		512		474		553
Amortization of debt financing costs		387		383		376
Total	$	9,317	$	3,710	$	3,156

Schedule of reconciliation of Credit Facility Adjusted EBITDA to net income


Net income	$	114,324
Provision for income taxes		37,418
Interest expense, net		9,093
Depreciation and amortization expense		51,572
Stock-based compensation		5,878
Pre-acquisition results of acquired companies, as defined under the Facility		1,404
Credit Facility Adjusted EBITDA	$	219,689

Schedule of market rates relating to interest options under the Facility


Base Rate Loan Option:
Federal Funds Rate plus 0.50%		2.05%
Wells Fargo Bank, N.A. Prime Rate		4.75%
One-month LIBOR plus 1.00%		2.76%
Eurodollar Rate Loan Option:
One-month LIBOR		1.76%
Six-month LIBOR		1.91%

Summary of additional margins


	Consolidated Total Indebtedness to
	Credit Facility Adjusted EBITDA
	Less than 1.00		1.00 to 1.75		1.75 to 2.50		2.50 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.25	%	0.50	%	0.75	%	1.00	%
Eurodollar Rate Loan Option	1.25	%	1.50	%	1.75	%	2.00	%
Letter of credit fees	1.25	%	1.50	%	1.75	%	2.00	%
Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time	0.20	%	0.25	%	0.30	%	0.35	%

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property and Equipment

Property and Equipment

6. Property and Equipment

Property and equipment consist of the following (dollars in thousands):


	Estimated
	Useful Lives	December 31,
	in Years	2019		2018
Land	—	$	6,206	$	5,702
Transportation equipment	1 - 7		106,972		98,898
Machinery and equipment	1 - 20		35,575		33,907
Computer and telephone equipment	1 - 10		20,744		20,179
Buildings and leasehold improvements	1 - 40		62,301		53,559
Furniture and fixtures	1 - 17		5,244		4,879
Construction in progress	—		2,123		1,715
			239,165		218,839
Less—Accumulated depreciation			(129,369)		(119,221)
Property and equipment, net		$	109,796	$	99,618

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $24.5 million, $22.6 million and $20.1 million, respectively.

Summary of Significant Accounting Policies - Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Option	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Lessee, Lease, Description [Line Items]
Variable lease expense and short-term lease expenses	$ 8,400
Weighted average discount rate	3.90%
Lease expense	$ 24,800	$ 23,400	$ 21,100
Weighted average remaining lease term	8 years 1 month 6 days
Rent paid to related parties	$ 3,700	$ 4,800	$ 4,800
Existence of option to extend	true
Summary of lease asset and liabilities
Lease right-of-use assets	$ 84,073
Lease Liabilities
Other current liabilities	$ 14,016
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities
Long-term lease liabilities	$ 72,697
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Long-term lease liabilities
Present Value of Lease Liabilities	$ 86,713
Minimum
Lessee, Lease, Description [Line Items]
Lease term	3 years
Number of options to renew \| Option	1
Maximum
Lessee, Lease, Description [Line Items]
Lease term	10 years

Stock-Based Compensation - Fair Value Assumptions (Details) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) item $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares
Fair value assumptions:
Expected term		5 years 3 months 18 days	5 years 3 months 18 days
Additional information
Allocated Share-based Compensation Expense \| $	$ 5.9	$ 7.2	$ 6.4
Stock Options
Stock-Based Compensation
Weighted-average fair value per share of options granted (in dollars per share)		$ 13.06	$ 11.43
Fair value assumptions:
Expected dividend yield (as a percent)		0.79%	0.89%
Expected stock price volatility (as a percent)		31.70%	34.50%
Risk-free interest rate (as a percent)		2.66%	2.11%
Other information
Compensation expense yet to be recognized \| $	$ 0.1
Weighted-average period over which compensation cost will be recognized	1 year
Total fair value of options vested \| $	$ 0.9
Nonvested Options, Shares
Nonvested at beginning of year (in shares) \| shares	163
Vested (in shares) \| shares	(82)
Nonvested at end of year (in shares) \| shares	81	163
Nonvested Options, Weighted-Average Grant Date Fair Value
Nonvested at beginning of year (in dollars per share)	$ 11.99
Granted (in dollars per share)		$ 13.06	$ 11.43
Vested (in dollars per share)	11.46
Nonvested at end of year (in dollars per share)	$ 12.53	$ 11.99
Additional information
Vesting period	3 years
Restricted Stock and Restricted Stock Units
Other information
Compensation expense yet to be recognized \| $	$ 0.9
Weighted-average period over which compensation cost will be recognized	1 year 10 months 24 days
Shares
Unvested at beginning of year (in shares) \| shares	78
Granted (in shares) \| shares	87
Vested (in shares) \| shares	(69)
Forfeited (in shares) \| shares	(5)
Unvested at end of year (in shares) \| shares	91	78
Weighted Average Grant Date Fair Value
Unvested at beginning of year (in dollars per share)	$ 38.17
Granted (in dollars per share)	51.02	$ 44.02	35.69
Vested (in dollars per share)	41.58
Forfeited (in dollars per share)	44.01
Unvested at end of year (in dollars per share)	$ 47.58	38.17
Additional information
Fair value of shares vested \| $	$ 2.9
Weighted-average fair value (in dollars per share)	$ 51.02	$ 44.02	$ 35.69
Aggregate intrinsic value of restricted stock vested \| $	$ 3.5	$ 3.3	$ 3.2
Performance Stock Units
Other information
Compensation expense yet to be recognized \| $	$ 0.4
Weighted-average period over which compensation cost will be recognized	1 year 4 months 24 days
Additional information
Vesting period	3 years
Types of performance units \| item	2
Percentage of units measured on stock price relative to peer group	50.00%
Percentage of units measured on stock price based on pre determined EPS	50.00%
Period for which shareholder return is compared with peer group for units determined by EPS performance	3 years
Calculated fair market value \| $	$ 5.0
Value of PSUs granted \| $	1.9
Allocated Share-based Compensation Expense \| $	$ 1.9	$ 2.9	$ 2.6
Performance Stock Units \| Minimum
Additional information
Performance measures for dollar denominated award granted	0
Performance Stock Units \| Maximum
Additional information
Performance measures for dollar denominated award granted	2.0

Stockholders' Equity - Number of Shares (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share
Common shares outstanding, end of period	36,658	36,894	37,187
Effect of using weighted average common shares outstanding	196	308	52
Shares used in computing earnings per share-basic	36,854	37,202	37,239
Effect of shares issuable under stock option plans based on the treasury stock method	204	283	316
Effect of restricted and contingently issuable shares	73	107	117
Shares used in computing earnings per share-diluted	37,131	37,592	37,672