More annual reports from IES Holdings, Inc.:
2023 ReportUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year endedSeptember 30, 2019 ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number 001-13783IES Holdings, Inc.(Exact name of registrant as specified in its charter)Delaware76-0542208(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)5433 Westheimer Road, Suite 500, Houston, Texas 77056(Address of principal executive offices and zip code)Registrant’s telephone number, including area code: (713) 860-1500Securities registered pursuant to Section 12(b) of the Act:Title of each class TradingSymbol Name of each exchange on which registeredCommon Stock, par value $0.01 per share IESC NASDAQ Global MarketRights to Purchase Preferred Stock IESC NASDAQ Global MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting companyEmerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑The aggregate market value of the voting stock of the registrant held by non-affiliates as of March 31, 2019, was approximately $148.9 million. On December 4, 2019, therewere 21,158,207 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCECertain information contained in the Proxy Statement for the 2020 Annual Meeting of Stockholders of the Registrant to be held on February 19, 2020, is incorporated byreference into Part III of this Annual Report on Form 10-K. FORM 10-KIES HOLDINGS, INC. AND SUBSIDIARIESINDEX PagePART I DEFINITIONS1DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS1Item 1.BUSINESS3Item 1A.RISK FACTORS11Item 1B.UNRESOLVED STAFF COMMENTS17Item 2.PROPERTIES17Item 3.LEGAL PROCEEDINGS18Item 4.MINE SAFETY DISCLOSURES18 PART II Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES19Item 6.SELECTED FINANCIAL DATA21Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS22Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK37Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA38Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE71Item 9A. CONTROLS AND PROCEDURES71Item 9B.OTHER INFORMATION71 PART III Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE72Item 11.EXECUTIVE COMPENSATION72Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS72Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE72Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES73 PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES73SIGNATURES77 PART IDEFINITIONSIn this Annual Report on Form 10-K, the words “IES”, the “Company”, the “Registrant”, “we”, “our”, “ours” and “us” refer to IES Holdings, Inc. and, except asotherwise specified herein, to our subsidiaries.DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K includes certain statements that may be deemed “forward-looking statements” within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, all of which are based upon various estimates andassumptions that the Company believes to be reasonable as of the date hereof. In some cases, you can identify forward-looking statements by terminology such as“may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “seek,” “estimate,” “predict,” “potential,” “pursue,” “target,”“continue,” the negative of such terms or other comparable terminology. These statements involve risks and uncertainties that could cause the Company’s actualfuture outcomes to differ materially from those set forth in such statements. Such risks and uncertainties include, but are not limited to:•the ability of our controlling shareholder to take action not aligned with othershareholders;•the sale or disposition of all or any portion of the shares of our common stock held by our controlling shareholder, which, could trigger change of controlprovisions in a number of our material agreements, including our financing and surety arrangements and our executive severance plan, as well asexercisability of the purchase rights under our tax benefit protection plan;•the possibility that certain tax benefits of our net operating losses may be restricted or reduced in a change in ownership or a change in the federal taxrate;•the potential recognition of valuation allowances or write-downs on deferred taxassets;•the inability to carry out plans and strategies as expected, including our inability to identify and complete acquisitions that meet our investment criteria infurtherance of our corporate strategy, or the subsequent underperformance of those acquisitions;•limitations on the availability of sufficient credit or cash flow to fund our working capital needs and capital expenditures and debtservice;•difficulty in fulfilling the covenant terms of our credit facility, including liquidity, and other financial requirements, which could result in a default andacceleration of any indebtedness we may incur under our revolving credit facility;•the possibility that we issue additional shares of common stock or convertible securities that will dilute the percentage ownership interest of existingstockholders and may dilute the value per share of our common stock;•the relatively low trading volume of our common stock, as a result of which it could be more difficult for shareholders to sell a substantial number of sharesfor the same price at which shareholders could sell a smaller number of shares;•competition in the industries in which we operate, both from third parties and former employees, which could result in the loss of one or more customers orlead to lower margins on new projects;•future capital expenditures and refurbishment, repair and upgrade costs; and delays in and costs of refurbishment, repair and upgradeprojects;•a general reduction in the demand for ourservices;•our ability to enter into, and the terms of, futurecontracts;•success in transferring, renewing and obtaining electrical and otherlicenses;•challenges integrating new businesses into the Company or new types of work, products or processes into oursegments;1 •credit and capital market conditions, including changes in interest rates that affect the cost of construction financing and mortgages, and the inability ofsome of our customers to retain sufficient financing, which could lead to project delays or cancellations;•backlog that may not be realized or may not result inprofits;•the possibility of errors when estimating revenue and progress to date on percentage-of-completioncontracts;•uncertainties inherent in estimating future operating results, including revenues, operating income or cashflow;•complications associated with the incorporation of new accounting, control and operatingprocedures;•closures or sales of facilities resulting in significant future charges, including potential warranty losses or other unexpected liabilities, or a significantdisruption of our operations;•an increased cost of surety bonds affecting margins on work and the potential for our surety providers to refuse bonding or require additional collateral attheir discretion;•fluctuations in operating activity due to downturns in levels of construction or the housing market, seasonality and differing regional economicconditions;•our ability to successfully manageprojects;•inaccurate estimates used when entering into fixed-pricedcontracts;•the cost and availability of qualified labor and the ability to maintain positive laborrelations;•our ability to pass along increases in the cost of commodities used in our business, in particular, copper, aluminum, steel, fuel and certainplastics;•a change in the mix of our customers, contracts orbusiness;•increases in bad debt expense and days sales outstanding due to liquidity problems faced by ourcustomers;•the recognition of potential goodwill, long-lived assets and other investmentimpairments;•potential supply chain disruptions due to credit or liquidity problems faced by oursuppliers;•accidents resulting from the physical hazards associated with our work and the potential foraccidents;•the possibility that our current insurance coverage may not be adequate or that we may not be able to obtain policies at acceptablerates;•the possibility that our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that couldoccur;•disagreements with taxing authorities with regard to tax positions we haveadopted;•the recognition of tax benefits related to uncertain taxpositions;•the effect of litigation, claims and contingencies, including warranty losses, damages or other latent defect claims in excess of our existing reserves andaccruals;•growth in latent defect litigation in states where we provide residential electrical work for home builders not otherwise covered byinsurance;•interruptions to our information systems and cyber security or databreaches;•liabilities under laws and regulations protecting the environment;and •loss of key personnel and effective transition of newmanagement.2 You should understand that the foregoing, as well as other risk factors discussed in this document, including those listed in Part I, Item 1A of this report under theheading “Risk Factors,” could cause future outcomes to differ materially from those experienced previously or those expressed in such forward-looking statements.We undertake no obligation to publicly update or revise any information, including information concerning our controlling shareholder, net operating losses,borrowing availability or cash position, or any forward-looking statements to reflect events or circumstances that may arise after the date of this report. Forward-looking statements are provided in this Annual Report on Form 10-K pursuant to the safe harbor established under the Private Securities Litigation Reform Act of1995 and should be evaluated in the context of the estimates, assumptions, uncertainties and risks described herein.Item 1. BusinessOVERVIEWIES Holdings, Inc. is a holding company that owns and manages operating subsidiaries in business activities across a variety of end-markets. Our operations arecurrently organized into four principal business segments, based upon the nature of our current services:•Commercial & Industrial – Provider of electrical and mechanical design, construction, and maintenance services to the commercial and industrial marketsin various regional markets and nationwide in certain areas of expertise, such as the power infrastructure market.•Communications – Nationwide provider of technology infrastructure services, including the design, build, and maintenance of the communicationsinfrastructure within data centers for colocation and managed hosting customers, for both large corporations and independent businesses.•Infrastructure Solutions – Provider of electro-mechanical solutions for industrial operations, including apparatus repair and custom-engineered products,such as generator enclosures, to be used in data centers and other industrial applications.•Residential – Regional provider of electrical installation services for single-family housing and multi-family apartmentcomplexes.Our businesses are managed in a decentralized manner. While sharing common goals and values, each of the Company’s segments manages its own day-to-dayoperations. Our corporate office is focused on significant capital allocation decisions, investment activities and selection of segment leadership. The corporateoffice also assists with strategic and operational improvement initiatives, talent development, sharing of best practices across the organization and theestablishment and monitoring of risk management practices within our segments.IES Holdings, Inc. is a Delaware corporation established in 1997 and headquartered in Houston, Texas, with an executive office in Greenwich, Connecticut. CORPORATE STRATEGYWe seek to create shareholder value through improving operating margins and generating free cash flow by investing in our existing businesses and completingacquisitions. We seek to acquire or invest in stand-alone platform companies based in North America or to acquire businesses that strategically complement ourexisting business segments. In evaluating potential acquisition candidates, we seek to invest in businesses with, among other characteristics:•proven management with a willingness to continue post-acquisition;•low technological and/or product obsolescence risk;•established market position and sustainable competitive advantages;and•strong cash flow characteristics.We believe that acquisitions provide an opportunity to expand into new end markets and diversify our revenue and profit streams, which we expect will allow us tomaximize the value of our significant net operating loss tax carry forwards (“NOLs”). While we may use acquisitions to build our presence in the industries weserve, we will also consider potential acquisitions in other industries, which could result in changes in our operations from those historically conducted by us.Controlling ShareholderA majority of our outstanding common stock is owned by Tontine Associates, L.L.C. and its affiliates (collectively, “Tontine”). Based on a Form 4 filed onOctober 3, 2019, Tontine owns approximately 58 percent of our outstanding common stock. As a result, Tontine can control most of our affairs, including mostactions requiring the approval of shareholders, such as the approval of any potential merger or sale of all or substantially all assets, segments, or the Companyitself. Most of Tontine’s shares are registered for resale on a3 shelf registration statement filed by the Company with the United States Securities and Exchange Commission (the “SEC”). Tontine’s sale of all or any portion ofits shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements,including our credit facility, bonding agreements with our sureties and our executive severance plan. For more information, see Note 3, “Controlling Shareholder”in the notes to our Consolidated Financial Statements.Net Operating Loss Tax Carry Forward and Other Deferred Tax AssetsThe Company and certain of its subsidiaries have an estimated federal net operating loss (“NOL”) of approximately $306.3 million at September 30, 2019,including approximately $143.6 million resulting from net operating losses on which a deferred tax asset is not recorded.In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted which, among other things, reduced the corporate income tax rate from 35% to 21%,effective January 1, 2018. As a result of this change, the Company’s statutory rate for fiscal 2018 was a blended rate of 24.53% and decreased to 21% in 2019. Forthe year ended September 30, 2018, our effective tax rate differed from the statutory tax rate as a result of a charge of $31.3 million to re-measure our deferred taxassets and liabilities to reflect the estimated impact of the new statutory tax rate. Any future change in the federal statutory tax rate could also impact the economicbenefit of the NOL and other deferred tax assets available to us and result in an additional charge or benefit to adjust the book value of the deferred tax assetrecorded on our balance sheet.A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs for federal and state income tax purposes. ShouldTontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur. In addition, a change in ownership could result fromthe purchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382. Should a change in ownership occur, allNOLs incurred prior to the change in ownership would be subject to limitation imposed by Internal Revenue Code Section 382, which would substantially reducethe amount of NOL currently available to offset taxable income. For more information see Note 3, “Controlling Shareholder” in the notes to our ConsolidatedFinancial Statements.The Company maintains a tax benefit protection plan (the “NOL Rights Plan”) which was designed to deter an acquisition of the Company’s stock in excess of athreshold amount that could trigger an ownership change within the meaning of Internal Revenue Code Section 382.OPERATING SEGMENTSThe Company’s reportable segments consist of the consolidated business segments identified above, which offer different services and are managed separately.The table below describes the percentage of our total revenues attributable to each of our four segments over each of the last three years: Year Ended September 30, 2019 2018 2017 $ % $ % $ % (Dollars in thousands, Percentage of revenues)Commercial & Industrial $305,624 28.4% $274,299 31.3% $227,606 28.1%Communications 321,246 29.8% 219,655 25.1% 225,275 27.8%Infrastructure Solutions 136,790 12.7% 97,163 11.1% 83,824 10.3%Residential 313,336 29.1% 285,711 32.6% 274,039 33.8%Total Consolidated $1,076,996 100.0% $876,828 100.0% $810,744 100.0%For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.Commercial & IndustrialBusiness DescriptionOur Commercial & Industrial segment provides electrical and mechanical design, service, and construction services to commercial and industrial markets. Ourdesign services range from budget assistance to providing design-build and LEED (Leadership in Energy & Environmental Design) solutions to our end customers.Our maintenance and emergency services include critical plant shutdown, troubleshooting, emergency testing, preventative maintenance, and constant presence.Our construction services range from the initial4 planning and procurement to installation and start-up and are offered to a variety of new and remodel construction projects, ranging from the construction of officebuildings and industrial facilities to transmission and distribution projects. We also provide mechanical services such as maintenance agreements, installation, orreplacement of mechanical equipment for commercial and industrial facilities.This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, chemical plants, refineries, windfarms, solar facilities, municipal infrastructure and health care facilities. The Commercial & Industrial segment consists of 23 locations, which includes thesegment headquarters in Houston, Texas. Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.Industry OverviewGiven the diverse end-markets of our Commercial & Industrial customers, which include both commercial buildings, such as offices, healthcare facilities andschools, and industrial projects, such as power, chemical, refinery and heavy manufacturing facilities, we are subject to many trends within the constructionindustry. In general, demand for our Commercial & Industrial services is driven by construction and renovation activity levels, economic growth, and availabilityof bank lending. Due to economic, technological or other factors, there can be no assurance that construction and demand will increase.Sales and MarketingOur sales focus varies by location, but is primarily based upon regional and local relationships and a demonstrated expertise in certain areas, such as heavyindustrial, design-build, agricultural, or transmission and distribution. Our maintenance and certain renovation and upgrade work tends to be either recurring orexperience lower sensitivity to economic cycles, or both. A significant portion of our larger projects are awarded from long-term, repeat customers. From time totime, we are contracted on projects with completion times extending beyond one year or over several years, which are generally more complex and difficult toestimate.With a focus on quality service offerings, our long-term strategy is to continue to be one of the preferred providers of electrical and mechanical services in themarkets where we have demonstrated expertise and/or are a local market leader. Key elements of our long-term strategy include leveraging our expertise in certainniche markets, expanding our service and maintenance business, attracting and retaining highly qualified employees, and maintaining our focus on returns on riskadjusted capital through an emphasis on reducing costs and managing working capital.CompetitionThe electrical and mechanical contracting services industry is generally highly competitive and includes a number of regional or small privately-held local firms.Traditionally, competitors in certain parts of this market have faced few barriers to entry. Our strategy is to pursue projects where our access to capital andexpertise provide a competitive advantage.Industry expertise, project size, location and past performance will determine our bidding strategy, the level of involvement from competitors and our level ofsuccess in winning awards. Our primary advantages vary by location and market, but mostly are based upon local individual relationships with key customers or ademonstrated industry expertise. Additionally, due to the size of many of our projects, our financial resources help us compete effectively against localcompetitors.Seasonality and Quarterly FluctuationsThe effects of seasonality on our Commercial & Industrial business are not significant, as most of our work generally is performed inside structures protected fromthe weather. However, we do perform some work outdoors, which can be affected by the weather. Most of our service and maintenance business is also generallynot affected by seasonality. However, the construction industry has historically been highly cyclical. Our volume of business may be adversely affected by declinesin construction projects resulting from adverse regional or national economic conditions. Quarterly results may also be materially affected by the timing of newconstruction projects. Accordingly, operating results for any fiscal period are not necessarily indicative of results that may be achieved for any subsequent fiscalperiod.CommunicationsBusiness DescriptionOriginally established in 1984, our Communications segment is a leading provider of network infrastructure solutions for data centers and other mission criticalenvironments. Our services include the design, installation and maintenance of network infrastructure to leading and recognizable global technology, socialnetworking and e-commerce brands, including many Fortune 100 and 500 corporations. We serve a variety of industries and end-markets, including data centersfor colocation and managed hosting customers; corporate, educational, financial, hospitality and healthcare buildings; e-commerce distribution centers; and high-tech manufacturing facilities. We also provide the design and installation of audio/visual, telephone, fire, wireless access and intrusion alarm systems, as well asdesign/build, service and maintenance of data network systems. We perform services across the United States from our 15 offices, which includes the segmentheadquarters located in Tempe, Arizona, and also provide dedicated onsite teams at our customers’ sites.5 Industry OverviewOur Communications segment is driven by demand increases for computing and storage resources as a result of technology advancements and obsolescence andchanges in data consumption patterns. The data center market remains strong, and the needs of several of our large customers are growing rapidly. Additionally, weare continuing to expand our offerings in this market to broaden our customer base. Demand has also been growing for our audio-visual and other buildingtechnology offerings. Nevertheless, due to economic, technological and other factors, there can be no assurance that demand will continue to increase.Sales and MarketingOur sales strategy relies on a concentrated business development effort, with centralized marketing programs and direct end-customer communications andrelationships. Due to the mission critical nature of the facilities we service, our end-customers significantly rely upon our past performance record, technicalexpertise and specialized knowledge. A significant portion of our Communications business volume is generated from long-term, repeat customers, some of whomuse IES as a preferred provider for major projects.Our long-term strategy is to improve our position as a preferred solutions and services provider to large national corporations and strategic local companies. Keyelements of our long-term strategy include continued investment in our employees’ technical expertise and expansion of our on-site maintenance and recurringrevenue model, as well as opportunistic acquisitions of businesses that serve our markets, consistent with our stated corporate strategy.CompetitionOur competition consists of both large national or regional competitors and small, privately owned contractors who have limited access to capital. We compete onquality of service and/or price and seek to emphasize our financial capabilities and long history of delivering high quality solutions to our customers.Seasonality and Quarterly FluctuationsThe effects of seasonality on our Communications business are not significant, as work generally is performed inside structures protected from the weather. Ourservice and maintenance business is also generally not affected by seasonality. However, communications infrastructure spending has historically been highlycyclical. Our volume of business may be adversely affected by declines in projects resulting from adverse regional or national economic conditions. Quarterlyresults may also be materially affected by the timing of new construction projects. Accordingly, operating results for any fiscal period are not necessarily indicativeof results that may be achieved for any subsequent fiscal period.Infrastructure SolutionsBusiness DescriptionOur Infrastructure Solutions segment provides electro-mechanical solutions for industrial operations to domestic and international customers. Our solutions includethe maintenance and repair of alternating current (AC) and direct current (DC) electric motors and generators, as well as power generating and distributionequipment; the manufacture of custom-engineered, metal enclosed bus duct solutions used in power distribution; the manufacture of custom commercial andindustrial generator enclosures; the manufacture, re-manufacture, and repair of industrial lifting magnets; and maintenance and repair of railroad main andauxiliary generators, main alternators, and traction motors.This segment serves the steel, railroad, marine, petrochemical, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, andutility industries. Our Infrastructure Solutions segment is comprised of nine locations and is headquartered in Ohio. These segment locations geographically coverAlabama, Georgia, Illinois, Indiana, Ohio, and West Virginia.Industry OverviewGiven the diverse end-markets of Infrastructure Solutions’ customers, we are subject to many economic trends. In general, demand for our services has been drivenby growth in industries, such as data centers, in-house maintenance departments continuing to outsource maintenance and repair work, output levels and equipmentutilization at heavy industrial facilities, railroad companies’ and mass transit authorities’ capital investments and repair needs, investment in the United States’aging energy and industrial infrastructure, demand for critical power applications, that have high power demands and require dependable power supplies, and theoverall health of the economy.Sales and MarketingDemand for Infrastructure Solutions’ services is largely driven by the degree to which industrial and mechanical services are outsourced by our customers,production rates at steel mills, investments in power generation, other heavy industrial facilities, data centers, and the need for electrical infrastructureimprovements. Our sales efforts are primarily driven by personnel based at our operating locations, as well as independent sales representatives. Given that themajority of our apparatus repair customers are located6 within a 200-mile radius of our facilities, we believe that this structure allows us to rapidly address and respond to the needs of our customers. Our custom-engineered bus system and generator enclosure products and services are principally sold in partnership with an original equipment manufacturer (“OEM”) or to anengineering, procurement and construction firm on behalf of the end-user. Our long term strategy is to be the preferred solutions provider of outsourced electro-mechanical services, repairs, and manufacturing to our select markets and a leader in custom-engineered metal enclosed bus systems. CompetitionOur competition is comprised mainly of small, specialized manufacturing and repair shops, a limited number of other multi-location providers of electric motorrepair, engineering and maintenance services, and various OEMs. Participants in this industry compete primarily on the basis of capabilities, service, quality,timeliness and price. We believe that we have a competitive advantage due to our breadth of capabilities, focus on quality, technical support, customer service, andfinancial resources.Seasonality and Quarterly FluctuationsInfrastructure Solutions’ revenues from industrial services may be affected by the timing of scheduled outages at its industrial customers’ facilities and by weatherconditions with respect to projects conducted outdoors, but the effects of seasonality on revenues in its industrial services business are not significant. InfrastructureSolutions’ quarterly results may fluctuate, and the results of one fiscal quarter may not be representative of the results of any other quarter or of the full fiscal year.ResidentialBusiness DescriptionOriginally established in 1973, our Residential segment is a leading provider of electrical installation services for single-family housing and multi-familyapartment complexes and cable television installations for residential and light commercial applications. In addition to our core electrical construction work, theResidential segment also provides services for the installation of residential solar power, both for new construction and existing residences. The Residentialsegment is made up of 30 total locations, which include the segment headquarters in Houston, Texas. These locations geographically cover the Sun-Belt, Westernand Mid-Atlantic regions of the United States.Industry OverviewOur Residential business is closely correlated to the single and multi-family housing market. Although demand for both single-family and multi-family housing hasincreased in recent years, due to economic, technological or other factors, there can be no assurance that overall construction and demand will continue to increasein the future.Sales and MarketingDemand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve. Although weoperate in multiple states throughout the Sun-Belt, Mid-Atlantic and Western regions of the United States, the majority of our single-family revenues are derivedfrom services provided in Texas. The Texas market also remains an important part of our multi-family business; however, the majority of our multi-family revenueis earned across the Mid-Atlantic and Southeast. Our sales efforts include a variety of strategies, including a concentrated focus on national and regionalhomebuilders and multi-family developers and a local sales strategy for single and multi-family housing projects. Our cable and solar revenues are typicallygenerated through third parties specializing in these industries who select us as a preferred provider of installation services. A significant portion of our Residentialbusiness volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects.Our long-term strategy is to continue to be a leading provider of electrical services to the residential market. The key elements of our long-term strategy include acontinued focus on maintaining a low and variable cost structure and cash generation, allowing us to effectively scale according to the housing cycle, and toopportunistically increase our market share.CompetitionOur competition primarily consists of small, privately owned contractors who have limited access to capital. We believe that we have a competitive advantage overthese smaller competitors due to our key employees’ long-standing customer relationships, our financial capabilities, our strong employee training program, andour local market knowledge and competitive pricing. There are few barriers to entry for electrical contracting services in the residential markets.Seasonality and Quarterly FluctuationsResults of operations from our Residential segment can be seasonal, depending on weather trends, with typically higher revenues generated during spring andsummer and lower revenues during fall and winter. Our service and maintenance business is generally not affected by seasonality. In addition, the constructionindustry has historically been highly cyclical. Our volume of business may be adversely affected7 by declines in multi-family occupancy rates as well as single-family housing starts within our operational footprint. Quarterly results may also be materiallyaffected by the timing of new construction projects. Accordingly, operating results for any fiscal period are not necessarily indicative of results that may beachieved for any subsequent fiscal period.SOURCES OF SUPPLYThe raw materials and components we use within our segments include, but are not limited to, electrical fixtures and system components, copper, aluminum, andraw steel. These raw materials and components are generally available from a variety of domestic suppliers at competitive prices. Delivery times are typically shortfor most raw materials and standard components, but during periods of peak demand, may extend to one month or more. Our strategy to reduce commodity costexposure includes early buying of commodities for particular projects or general inventory, as well as including escalation and escape provisions in project bids,quotes and contracts wherever possible. However, such protections may not be included in every contract or project, and in such cases, we may not be fullyreimbursed for increases in commodity prices by our customers and may be exposed to commodity price volatility on longer-term projects where we have prepaidfor commodities.RISK MANAGEMENTThe primary risks in our existing operations include project bidding and management, bodily injury, property and environmental damage, and construction defects.We monitor project bidding and management practices at various levels within the Company. We maintain automobile, general liability and construction defectinsurance for third party health, bodily injury and property damage, as well as pollution coverage and workers’ compensation coverage, which we considerappropriate to insure against these risks. Our third-party insurance is subject to deductibles for which we establish reserves. In light of these risks, we are alsocommitted to a strong safety and environmental compliance culture. We employ full-time and part-time regional safety managers, under the supervision of ourfull-time Senior Vice President of Safety, and seek to maintain standardized safety and environmental policies, programs, procedures and personal protectionequipment relative to each segment, including programs to train new employees, which apply to employees new to the industry and those new to the Company. Weare also subject to cyber security and information theft risks in our operations, which we seek to manage through a cyber and information security program,training and insurance coverage. Given the dynamic and evolving nature of cyber threats, we cannot be assured that we are protected against all such threats.In the electrical contracting industry, our ability to post surety bonds provides us with an advantage over competitors that are smaller or have fewer financialresources. We believe that the strength of our balance sheet, as well as a good relationship with our bonding providers, enhances our ability to obtain adequatefinancing and surety bonds, although there can be no assurance that surety bonding coverage will be available when we need it. For a further discussion of ourrisks, please refer to Item 1A. “Risk Factors” of this Annual Report on Form 10-K.CUSTOMERSWe have a diverse customer base. During each of the years ended September 30, 2019, 2018 and 2017, no single customer accounted for more than 10% of ourconsolidated revenues. We emphasize developing and maintaining relationships with our customers by providing superior, high-quality service. Management ateach of our segments is responsible for determining sales strategies and sales activities.REMAINING PERFORMANCE OBLIGATIONS AND BACKLOGRemaining performance obligations represent the unrecognized revenue value of our contract commitments. While backlog is not a defined term under GAAP, it isa common measurement used in our industry, and we believe it improves our ability to forecast future results and identify operating trends that may not otherwisebe apparent. Backlog is a measure of revenue that we expect to recognize from work that has yet to be performed on uncompleted contracts and from work that hasbeen contracted but has not started, exclusive of short-term projects. While all of our backlog is supported by documentation from customers, backlog is not aguarantee of future revenues, as contractual commitments may change and our performance may vary. Not all of our work is performed under contracts includedin backlog; for example, most of the apparatus repair work that is completed by our Infrastructure Solutions segment is performed under master service agreementson an as-needed basis. Additionally, electrical installation services for single-family housing at our Residential segment are completed on a short-term basis andare therefore excluded from backlog. The table below summarizes our backlog by segment:8 Year Ended September 30, 2019 2018 RemainingPerformanceObligationsAgreementswithout anenforceableobligation (1)Backlog RemainingPerformanceObligationsAgreementswithout anenforceableobligation (1)Backlog (Dollars in millions)Commercial & Industrial$152$11$163 $145$61$206Communications13129160 85994Infrastructure Solutions371148 334376Residential13234166 6343106Total$452$85$537 $326$156$482(1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work. These agreements are excluded fromremaining performance obligations until work begins.We expect that $392 million of our September 30, 2019 backlog will result in revenue during fiscal 2020, with the remaining $145 million expected to be realizedin fiscal 2021; however, there can be no assurance that this backlog will be completed within expected time frames or at all. The increase in our backlog year overyear was driven by strong demand and increased market share within our Communications and Residential segments.REGULATIONSOur operations are subject to various federal, state and local laws and regulations, including:•licensing requirements applicable to electricians and mechanical servicetechnicians;•building and electrical codes;•regulations relating to worker safety, labor relations and protection of theenvironment;•regulations relating to consumer protection, including those governing residential service agreements;and•qualifications of our business legal structure in the jurisdictions where we dobusiness.Many state and local regulations governing electricians and mechanical services require permits and licenses to be held by individuals. In some cases, a requiredpermit or license held by a single individual may be sufficient to authorize specified activities for all our electricians or mechanical service technicians who workin the state or county that issued the permit or license. While we seek permits or licenses, where available, that may be material to our operations in a particulargeographic area to be held by multiple employees within that area, given the large number of permits and licenses required, we are unable to ensure that multipleemployees hold such required permits and licenses.We believe we have all licenses required to conduct our operations and are in compliance with applicable regulatory requirements. Failure to comply withapplicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work.CAPITAL FACILITIESDuring fiscal year 2019, the Company maintained a revolving credit facility, as further described in Item 7. “Management’s Discussion and Analysis of FinancialCondition and Results of Operations — The Revolving Credit Facility” of this Annual Report on Form 10-K. For a discussion of the Company’s capital resources,see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of this Annual Reporton Form 10-K.9 FINANCIAL INFORMATIONFor the Company’s financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.EMPLOYEESAt September 30, 2019, we had 5,389 employees. We are party to two collective bargaining agreements within our Infrastructure Solutions segment. We have notexperienced, and do not expect, any work stoppage, and we believe that our relationship with our employees is strong.LOCATIONSAs of September 30, 2019, we have 79 domestic locations serving the United States. In addition to our two executive and corporate offices, as of September 30,2019, we have 23 locations within our Commercial & Industrial business, 15 locations within our Communications business, nine locations within ourInfrastructure Solutions business and 30 locations within our Residential business. This diversity helps to reduce our exposure to unfavorable economicdevelopments in any given region.EXECUTIVE OFFICERS OF THE REGISTRANTCertain information with respect to each executive officer is as follows:Gary S. Matthews, 62, has served as Chief Executive Officer and a Director of the Company since March 2019. Prior to joining the Company, he served asManaging Director of Morgan Stanley Capital Partners from 2007 where he worked with the private equity team in evaluating companies for direct investment andhelping to oversee the management and strategies for those businesses. Prior to joining Morgan Stanley, Mr. Matthews led several private equity-backedmanufacturing companies, including serving as President of Simmons Bedding Company, Chief Executive Officer of Sleep Innovations, Inc. and Chief ExecutiveOfficer of Derby Cycle Corporation, and also led business units of several public companies. He received a B.A., cum laude, from Princeton University and hisMasters in Business with distinction from Harvard Business School. Mr. Matthews currently serves on the board of directors of Pathway Partners Vet HoldingLLC and Manna Pro Products, LLC. He has previously served as Chairman of the board of directors of Hojeij Branded Foods, Creative Circle, LLC and TopsMarkets, LLC, and as a member of the board of directors of Lagunitas Brewing Company, Molson Coors Brewing Company, Lenox Group Inc. (previouslyDepartment 56), Learning Care Group, Inc., Van Wagner, Inc. and Canyon Ranch.Tracy A. McLauchlin, 50, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015. She previously served asVice President and Chief Accounting Officer of the Company since February 2014. Prior to joining IES, Ms. McLauchlin served as Vice President and ChiefAccounting Officer of Rockwater Energy Solutions, Inc. from June 2011 to November 2013. From June 2004 to June 2011, Ms. McLauchlin was with DynegyInc., where she served as Senior Vice President and Controller from March 2009 to June 2011 and from June 2004 to March 2009 served in various othercapacities in finance and accounting. She began her career with PricewaterhouseCoopers LLP after receiving her Master of Accounting from Rice University. Ms. McLauchlin is a Certified Public Accountant. We have adopted a Code of Ethics for Financial Executives that applies to our principal executive officer, principal financial officer and principal accountingofficer. The Code of Ethics may be found on our website at www.ies-co.com. If we make any substantive amendments to the Code of Ethics or grant any waiver,including any implicit waiver, from a provision of the Code of Ethics to our principal executive officer, principal financial officer or principal accounting officer,we will disclose the nature of such amendment or waiver on that website or in a report on Form 8-K. Paper copies of these documents are also available free ofcharge upon written request to us.AVAILABLE INFORMATIONGeneral information about us can be found on our website at www.ies-co.com under “Investor Relations.” We file our interim and annual financial reports, as wellas other reports required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the SEC.Our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports areavailable free of charge through our website as soon as it is reasonably practicable after we file them with, or furnish them to, the SEC. You may also contact ourInvestor Relations department and they will provide you with a copy of these10 reports, or you may find them at www.ies-corporate.com/sec-filings. The materials that we file with the SEC are also available free of charge through the SEC’swebsite at www.sec.gov.In addition to the Code of Ethics for Financial Executives, we have adopted a Code of Business Conduct and Ethics for directors, officers and employees (theLegal Compliance and Corporate Policy Manual), and established Corporate Governance Guidelines and adopted charters outlining the duties of our Audit, HumanResources and Compensation and Nominating/Governance Committees, copies of which may be found on our website. Paper copies of these documents are alsoavailable free of charge upon written request to us. We have designated an “audit committee financial expert” as that term is defined by the SEC. Furtherinformation about this designee may be found in the Proxy Statement for the 2020 Annual Meeting of Stockholders of the Company.Item 1A. Risk FactorsYou should consider carefully the risks described below, as well as the other information included in this document before making an investment decision. Ourbusiness, results of operations or financial condition could be materially and adversely affected by any of these risks, and the value of your investment maydecrease due to any of these risks.Risks Relating to Our Common StockExistence of a controlling shareholder.A majority of our outstanding common stock is owned by Tontine. Based on a Form 4 filed by Tontine on October 3, 2019, Tontine owns approximately 58percent of the Company’s outstanding common stock. As a result, Tontine can control most of our affairs, including the election of our directors, who in turnappoint executive management and can control most actions requiring the approval of shareholders, including the adoption of amendments to our corporate charterand approval of any potential merger or sale of all or substantially all assets, segments, or the Company itself. This control also gives Tontine the ability to bringmatters to a shareholder vote that may not be in the best interest of our other shareholders or stakeholders. Additionally, Tontine is in the business of investing incompanies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us or act as suppliers or customers of theCompany. Pursuant to a resale shelf registration statement filed by the Company, Tontine has the ability to resell any or all of its registered shares from time totime in one or more offerings as long as the registration statement remains effective and the Company remains eligible to use it, as described further in theregistration statement and in any prospectus supplement filed in connection with an offering pursuant to the shelf registration statement. Tontine’s sale of all or anyportion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our materialagreements, including our credit facility, bonding agreements with our sureties, and our executive severance plan, as well as the exercisability of the purchaserights under our NOL Rights Plan.Our common stock has less liquidity than many other stocks listed on the NASDAQ Global Market.Historically, the trading volume of our common stock has been relatively low when compared to other companies listed on the NASDAQ Global Market or otherstock exchanges. While we have experienced increased liquidity in our stock during recent years compared with historical levels, we cannot say with certainty thata more active and liquid trading market for our common stock will continue to develop. Because of this, it may be more difficult for shareholders to sell asubstantial number of shares for the same price at which shareholders could sell a smaller number of shares.We may issue additional shares of common stock or convertible securities that will dilute the percentage ownership interest of existing stockholders andmay dilute the book value per share of our common stock.Our authorized capital includes 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of September 30, 2019, we had 22,049,529shares of common stock issued, 21,165,011 shares of common stock outstanding and no shares of preferred stock issued or outstanding. We have reserved forissuance 21,750 shares of common stock underlying options that are exercisable at a weighted average price of $6.35 per share. In addition, as of September 30,2019, we had the ability to issue 824,676 shares of common stock, including upon the exercise of options, as future grants under our existing equity compensationplans.Although we currently do not have any intention of issuing additional common stock (other than pursuant to our equity compensation plans), we may do so in thefuture in order to meet our capital needs. Subject to applicable NASDAQ Listing Rules, our Board of Directors generally has the authority, without action by orvote of the stockholders, to issue all or part of any authorized but unissued shares of common stock for any corporate purpose. We may seek additional equitycapital in the future as we develop our business and expand our operations. Any issuance of additional shares of common stock or convertible securities will dilutethe percentage ownership interest of our stockholders and may dilute the book value per share of our common stock.11 Substantial sales of our common stock could adversely affect our stock price.Most of Tontine's shares are registered for resale on a shelf resale registration statement filed by the Company with the SEC. Sales of a substantial number ofshares of our common stock by holders of our common stock, including Tontine or the perception that such sales could occur, could adversely affect the marketprice of our common stock by introducing a large number of shares into the market. Such sales, or the perception that such sales could occur, could cause themarket price of our common stock to decline. We cannot predict whether future sales of our common stock, or the availability of our common stock for sale, willadversely affect the market price for our common stock or our ability to raise capital by offering equity securities.Risks Relating to the Operations of our BusinessThe highly competitive nature of our industries could affect our profitability by reducing our profit margins.With respect to electrical contracting services, the industries in which we compete are highly fragmented and are served by many small, owner-operated privatecompanies. There are also several large private regional companies and a small number of large public companies from which we face competition in theseindustries. In the future, we could also face competition from new competitors entering these markets because certain segments, such as our electrical contractingservices, have a relatively low barrier for entry while other segments, such as our services for mission critical infrastructure, have attractive characteristics. Someof our competitors offer a greater range of services, including mechanical construction, facilities management, plumbing and heating, ventilation and airconditioning services. Competition in our markets depends on a number of factors, including price. Some of our competitors may have lower overhead coststructures and may, therefore, be able to provide services comparable to ours at lower rates than we do. If we are unable to offer our services at competitive pricesor if we have to reduce our prices to remain competitive, our profitability would be impaired.The markets in which Infrastructure Solutions does business are highly competitive, and we do not expect the level of competition that we face to decrease in thefuture. An increase in competitive pressures in these markets or our failure to compete effectively (including efficiently managing future capital expenditures andrefurbishment, repair and upgrade costs) may result in pricing reductions, reduced gross margins, and loss of market share. Some of our competitors have longeroperating histories, greater name recognition, more customers, and significantly greater financial, marketing, technical, and other competitive resources than wehave. These competitors may be able to adapt more quickly to new technologies and changes in customer needs or devote greater resources to the development,promotion, and sale of their services. While we believe Infrastructure Solutions’ overall product and service offerings distinguish it from its competitors, thesecompetitors could develop new products or services that could directly compete with Infrastructure Solutions’ services.We generate a significant portion of our revenues under fixed price contracts. The estimates we use in placing bids and changes in commodity and laborcosts could have an adverse effect on our ability to maintain our profitability.We currently generate, and expect to continue to generate, a significant portion of our revenues under fixed price contracts. The cost of fuel, labor and materials,including copper wire or other commodities, may vary significantly from the costs we originally estimate. Variations from estimated contract costs along withother risks inherent in performing fixed price contracts, including our ability to successfully manage projects, may result in actual revenue and gross profits for aproject differing from those we originally estimated and could result in losses on projects. Depending upon the size of a particular project, variations fromestimated contract costs can have a significant impact on our operating results.If the costs associated with labor and commodities, such as copper, aluminum, steel, fuel and certain plastics, increase due to low supply or other forces, lossesmay be incurred. Some of our materials have been and may continue to be subject to sudden and significant price increases. Depending on competitive pressuresand customer resistance, we may not be able to pass on these cost increases to our customers, which would reduce our gross profit margins and, in turn, make itmore difficult for us to maintain our profitability. We have a work force of over 5,000 employees, and our labor costs may fluctuate based on supply as well asother labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensationarrangements. A failure to secure new contracts may adversely affect our cash flows and financial results.Much of our revenue is derived from projects that are awarded through a competitive bid process. Contract bidding and negotiations are affected by a number offactors, including our own cost structure and bidding policies. In addition, our ability to secure new contracts depends on our ability to maintain all requiredelectrical, construction, mechanical and business licenses. If we fail to successfully transfer, renew or obtain such licenses where applicable, we may be unable tocompete for new business.The failure to bid and be awarded projects, cancellations of projects or delays in project start dates could affect our ability to deploy our assets profitably. Further,when we are awarded contracts, we face additional risks that could affect whether, or when, work will12 begin. We could experience a decrease in profitability if we are unable to replace canceled, completed or expired contracts with new work.Our inability to carry out plans and strategies as expected, including our inability to identify and complete acquisitions that meet our investment criteriain furtherance of our corporate strategy or the subsequent underperformance of those acquisitions, may adversely impact our future growth.Our corporate strategy involves creating shareholder value through acquiring or investing in stand-alone platform companies based in North America or acquiringbusinesses that we believe will strategically complement our existing business segments. While we believe that acquisitions will provide an opportunity to expandinto new end-markets and diversify our revenue and profit streams, potential acquisitions in new industries could result in changes in our operations from thosehistorically conducted by us and introduce the requirement for new controls. Alternatively, our failure to diversify from existing markets may limit our futuregrowth. In addition, our investments may not perform as expected or may not generate a positive return on investment, due to factors we could not predict prior tothe acquisition or due to incorrect investment assumptions.We may be unsuccessful at integrating other companies that we may acquire, or new types of work, products or processes into our segments.We are actively seeking to engage in acquisitions of operations, assets and investments, or to develop new types of work or processes, and we may seek to engagein dispositions of certain operations, assets or investments from time to time. If we are unable to successfully integrate newly acquired assets or operations or if wemake untimely or unfavorable investments or dispositions, it could negatively impact the market value of our common stock. Additionally, any future acquisition,investment or disposition may result in significant changes in the composition of our assets and liabilities, and as a result, our financial condition, results ofoperations and the market value of our common stock following any such acquisition, investment or disposition may be affected by factors different from thosecurrently affecting our financial condition, results of operations and market value of our common stock. The difficulties of integrating a business, assets or operations potentially will include, among other things:•geographically separated organizations and possible differences in corporate cultures and managementphilosophies;•significant demands on management resources, which may distract management’s attention from day-to-daybusiness;•differences in the disclosure systems, compliance requirements, accounting systems, and accounting controls and procedures of the acquired company,which may interfere with our ability to make timely and accurate public disclosure; and•the demands of managing new locations, new personnel and new lines of businessacquired.Demand for our services is cyclical and vulnerable to economic downturns affecting the industries we serve.Demand for our services has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the general economy, as well as in theconstruction industry and the housing market. Many of our customers depend on the availability of credit to purchase our services or electrical and mechanicalproducts. Prolonged uncertainties in, or the return of, constrained credit market conditions could have adverse effects on our customers, which would adverselyaffect our financial condition and results of operations.Backlog may not be realized or may not result in profits.Customers often have no obligation under our contracts to assign or release work to us, and many contracts may be terminated on short notice. Reductions inbacklog due to cancellation of one or more contracts by a customer or for other reasons could significantly reduce the revenue and profit we actually receive fromcontracts included in backlog. In the event of a project cancellation, we may be reimbursed for certain costs, but typically have no contractual right to the totalrevenues reflected in our backlog.We may incur significant charges or be adversely impacted by the closure or sale of facilities or assets.In the past, we incurred significant costs associated with the closure or disposition of facilities, and we expect from time to time to evaluate the need for futurefacility closures or dispositions of assets. If we were to elect to dispose of a substantial portion of any of our segments, facilities, or assets, the realized values ofsuch assets could be substantially less than current book values, which would likely result in a material adverse impact on our financial results. In addition, wemay have warranty claims or other unexpected liabilities from closed facilities beyond the closing date, which could adversely impact our financial returns.The availability and cost of surety bonds affect our ability to enter into new contracts and our margins on those engagements.Many of our customers require us to post performance and payment bonds issued by a surety. Those bonds guarantee the customer that we will perform under theterms of a contract and that we will pay subcontractors and vendors. We obtain surety bonds from two primary13 surety providers; however, there is no commitment from these providers to guarantee our ability to issue bonds for projects as they are required. Our ability toaccess this bonding capacity is at the sole discretion of our surety providers. Accordingly, if we were to experience an interruption or reduction in our availabilityof bonding capacity, we may be unable to compete for, or work on, certain projects.Due to seasonality and differing regional economic conditions, our results may fluctuate from period to period.Our business is subject to seasonal variations in operations and demand that affect the construction business, particularly in the Residential and Commercial &Industrial segments, as well as seasonal variations in the industries in which Infrastructure Solutions participates. Untimely weather delay from rain, heat, ice, coldor snow can not only delay our work but can negatively impact our schedules and profitability by delaying the work of other trades on a construction site. Ourquarterly results may also be affected by regional economic conditions that affect the construction market. In particular, a prolonged period of weak demand in theoil and gas industry could dampen the housing market in certain regions, resulting in reduced demand for the services provided by our Residential segment.Infrastructure Solutions’ revenues from industrial services may be affected by the timing of scheduled outages at its industrial customers’ facilities, by weatherconditions with respect to projects conducted outdoors, by data center construction, and by changes in spending in public infrastructure, power and steel markets.Industrial and rail customers may also be affected by volatility in oil prices. Accordingly, our performance in any particular quarter may not be indicative of theresults that can be expected for any other quarter or for the entire year.We may experience difficulties in managing our billings and collections.Our billings under fixed price contracts in our electrical contracting business are generally based upon achieving certain milestones and will be accepted by thecustomer once we demonstrate those milestones have been met. If we are unable to demonstrate compliance with billing requests, or if we fail to issue a projectbilling, our likelihood of collection could be delayed or impaired, which, if experienced across several large projects, could have a material adverse effect on ourresults of operations. Further, some of our customers may be highly leveraged or may be subject to their own operating and regulatory risks, which may also limittheir ability to pay.Our operations are subject to numerous physical hazards. If an accident occurs, it could result in an adverse effect on our business. Hazards related to our industry include, but are not limited to, electrocutions, fires, injuries involving ladders, machinery-caused injuries, mechanical failures andtransportation accidents. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment, and suspension ofoperations. Our insurance does not cover all types or amounts of liabilities. In addition, if our safety record were to substantially deteriorate over time, ourcustomers could cancel our contracts or not award us future business.Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.Our third-party insurance is subject to deductibles for which we establish reserves. No assurance can be given that our insurance or our provisions for incurredclaims and incurred but not reported claims will be adequate to cover all losses or liabilities we may incur in our operations; nor can we provide assurance that wewill be able to maintain adequate insurance at reasonable rates.Litigation and claims can cause unexpected losses.In all of our businesses, we are subject to potential claims and litigation, including contractual disputes, warranty claims, and claims related to our compliance withlegal and regulatory requirements. Such claims and litigation are common in the construction and electrical and mechanical maintenance businesses and may berelated to contract delays, changes in the scope of work or alleged defects. There are also inherent claims and litigation risks associated with the number of peoplethat work on construction sites and the fleet of vehicles on the road every day. In our Infrastructure Solutions businesses, we also may be subject to product liabilitylitigation. Claims are sometimes made and lawsuits filed for amounts in excess of their value or in excess of the amounts for which they are eventually resolved.Claims and litigation normally follow a predictable course of time to resolution. However, there may be periods of time in which a disproportionate amount of ourclaims and litigation are concluded in the same quarter or year. If multiple matters are resolved during a given period, then the cumulative effect of these mattersmay be higher than the ordinary level in any one reporting period.Latent defect litigation is normal for residential home builders in some parts of the country, as well as in certain areas of the commercial market. Any increases inour latent defect claims and litigation could place pressure on the profitability of the Residential and Commercial & Industrial segments of our business.14 Interruptions in the proper functioning of our information systems, or security breaches of our information systems or confidential data, could disruptoperations and cause increases in costs and/or decreases in revenues.As our Company continues to increase its dependence on information technology systems, networks, and infrastructure to conduct its day to day operations, theproper functioning and security of our information technology environment are critical to the successful operation of our business. Although our informationsystems, networks and infrastructure are protected through physical and software safeguards, our information technology environment is still vulnerable to naturaldisasters, power losses, telecommunication failures, deliberate intrusions and other cyber security risks, and other problems, which could cause a loss of data,release of personally identifiable information or release of confidential customer information among other items. If critical information systems fail or areotherwise unavailable or confidential information is released, our business operations could be adversely affected.We may be required to conduct environmental remediation activities, which could be expensive and inhibit the growth of our business and our ability tomaintain profitability, particularly in our Infrastructure Solutions business.We are subject to a number of environmental laws and regulations, including those concerning the handling, treatment, storage, and disposal of hazardousmaterials. These laws predominantly affect our Infrastructure Solutions business but may impact our other businesses. These environmental laws generally imposeliability on current and former owners and operators, transporters and generators of hazardous materials for remediation of contaminated properties. We believethat our business is operating in compliance in all material respects with applicable environmental laws, many of which provide for substantial penalties forviolations. There can be no assurance that future changes in such laws, interpretations of existing regulations or the discovery of currently unknown problems orconditions will not require substantial additional expenditures. In addition, if we do not comply with these laws and regulations, we could be subject to materialadministrative, civil or criminal penalties, or other liabilities. We may also be required to incur substantial costs to comply with current or future environmentaland safety laws and regulations. Any such additional expenditures or costs that we may incur could hurt our operating results.The loss of a group or several key personnel, either at the corporate or operating level, or general labor constraints could adversely affect our business.The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business, financial condition and results ofoperations. Our operations depend on the continued efforts of our executive officers, senior management and management personnel at our segments. We cannotguarantee that any member of management at the corporate or subsidiary level will continue in their capacity for any particular period of time. We have aseverance plan in place that covers certain of our senior leaders; however, this plan can neither guarantee that we will not lose key employees, nor prevent themfrom competing against us, which is often dependent on state and local employment laws. If we lose a group of key personnel or even one key person at a segment,we may not be able to recruit suitable replacements at comparable salaries or at all, which could adversely affect our operations. Additionally, we generally do notmaintain key man life insurance for members of our management. We also may be constrained in hiring and retaining qualified employees due to historically lowunemployment rates and general labor shortages in our industries. Continued labor constraints may limit our ability to grow and may limit our profitability due tothe impact of rising wages.Risks Relating to our Financial Results, Financing and LiquidityAvailability of net operating losses may be reduced by a change in ownership.A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs, for federal and state income tax purposes. ShouldTontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur. A change in ownership could also result from thepurchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382. As of September 30, 2019, we haveapproximately $306.3 million of federal NOLs that are available to use to offset taxable income, including approximately $143.6 million resulting from netoperating losses on which a deferred tax asset is not recorded. Should a change in ownership occur, all NOLs incurred prior to the change in ownership would besubject to limitation imposed by Internal Revenue Code Section 382, which would substantially reduce the amount of NOL currently available to offset taxableincome.The Company maintains an NOL Rights Plan, which was designed to deter an acquisition of the Company’s stock in excess of a threshold amount that couldtrigger an ownership change within the meaning of Internal Revenue Code Section 382. The NOL Rights Plan is designed to dilute the ownership of such anacquirer through the offering of rights to the Company’s other stockholders that will become exercisable upon the acquirer’s purchase of the Company’s stock inexcess of the threshold amount. We can make no assurances the NOL Rights Plan will be effective in deterring an ownership change or protecting or realizingNOLs. 15 We have adopted tax positions that a taxing authority may view differently. If a taxing authority differs with our tax positions, our results may beadversely affected.Our effective tax rate and cash paid for taxes are impacted by the tax positions that we have adopted. Taxing authorities may not always agree with the positionswe have taken. We have established reserves for tax positions that we have determined to be less likely than not to be sustained by taxing authorities. However,there can be no assurance that our results of operations will not be adversely affected in the event that disagreement over our tax positions does arise.We have recognized deferred tax assets based upon our estimates of future taxable income, and we may recognize tax expense if there is a reduction inthe statutory tax rate or if future taxable income is lower than our estimates.As of September 30, 2019, we have a net deferred tax asset of $40.9 million on our Consolidated Balance Sheet, of which $39.0 million is attributable to NOLs. Torealize the full benefit of this deferred tax asset attributable to NOLs, we must generate sufficient taxable income within the applicable carry forward period tooffset against NOLs. Under accounting principles generally accepted in the United States of America ("GAAP"), we are required to assess whether we believe thebenefit of the deferred tax asset is more likely than not to be realized based on our expectation of generating sufficient future taxable income, and we are requiredto record a valuation allowance, or offset, against our deferred tax asset based on the portion of the deferred tax asset that we believe is not more likely than not tobe realized.If we are unable to generate sufficient taxable income in the future to utilize our NOLs, then we could be required to record valuation allowances, resulting in anincrease in income tax expense and a reduction of our consolidated net income. Failure to generate sufficient taxable income in the future could also result in theexpiration of certain NOLs.In addition, we recorded a charge of $31.3 million during fiscal 2018 to reflect the impact of the reduced statutory federal corporate tax rate as a result of the U.S.Tax Cuts and Jobs Act, which became effective on January 1, 2018, on the value of our net deferred tax asset on our Consolidated Balance Sheet. Any furtherdecrease in the federal statutory tax rate or other changes in federal tax statutes could also cause a reduction in the economic benefit of the NOL currently availableto us and a corresponding reduction in the amount of our recorded deferred tax assets.To fund our working capital requirements and service any debt we may incur, we may require a significant amount of cash. Our ability to generate cashdepends on many factors that are beyond our control.Our ability to make payments on and to refinance any indebtedness we may incur and to fund working capital requirements will depend on our ability to generatecash in the future. This is subject to our operational performance, as well as general economic, financial, competitive, legislative, regulatory and other factors thatare beyond our control.We cannot provide assurance that our business will generate sufficient cash flow from operations or asset sales or that future borrowings will be available to usunder our credit facility in an amount sufficient to enable us to service any debt we may incur or to fund our other liquidity needs. We may need to refinance ourcredit facility on or before maturity. We cannot provide assurance that we will be able to refinance our credit facility on commercially reasonable terms or at all.Our inability to access capital on commercially reasonable terms could have a material adverse effect on our business.We have restrictions and covenants under our credit facility and the failure to meet these covenants, including liquidity and other financial requirements,could result in a default under our credit facility.We may not be able to remain in compliance with the covenants in our credit facility, including financial covenants which, among other things, require minimumlevels of liquidity and require us to maintain a specified fixed charge coverage ratio as defined under our credit facility. A failure to fulfill the terms andrequirements of our credit facility may result in a default under our credit agreement and acceleration of any indebtedness we may incur, as well as a default underone or more of our material agreements, any of which could have a material adverse effect on our ability to conduct our operations and our financial condition.Our use of percentage-of-completion accounting could result in a reduction or elimination of previously reported profits, and we may be adverselyimpacted by new accounting, control and operating procedures.A significant portion of our revenue is recognized using the percentage-of-completion method of accounting, utilizing the cost-to-cost method, which results in ourrecognizing contract revenues and earnings ratably over the contract term in proportion to contract costs incurred. The earnings or losses recognized on individualcontracts are based on estimates of contract revenues, costs and profitability. We review our estimates of contract revenue, costs and profitability on an ongoingbasis. Prior to contract completion, we may adjust our estimates on one or more occasions as a result of change orders to the original contract, collection disputeswith the customer on amounts invoiced or claims against the customer for increased costs incurred by us due to customer-induced delays and other factors.16 Contract losses are recognized in full when determined to be probable and reasonably estimable. Although we have historically made reasonably reliable estimatesof the progress towards completion of our construction contracts, the uncertainties inherent in the estimating process make it possible for actual costs to varymaterially from estimates, including reductions or reversals of previously recorded revenues and profits. In addition, we may be adversely impacted by newaccounting pronouncements which change our revenue recognition or other accounting practices or otherwise alter how we report our financial results, or whichrequire that we change our control and operating procedures, which we may be unable to do in a timely manner.Our reported operating results could be adversely affected as a result of goodwill impairment charges.GAAP accounting requires that goodwill attributable to each of our reporting units be tested at least annually, or when changes in circumstance indicate thecarrying value of our reporting units may not be recoverable. Factors that could lead to impairment of goodwill include significant adverse changes in the businessclimate, declines in the financial condition of our business, and actual or projected operating results affecting our company as a whole or affecting any particularreporting unit. On an ongoing basis, we expect to perform impairment tests at least annually as of September 30. Impairment adjustments, if any, are required to berecognized as operating expenses. We cannot assure that we will not have future impairment adjustments to our recorded goodwill.Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. Internalcontrols over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, notabsolute, assurance that the control system’s objective will be met.On a quarterly basis we evaluate our internal controls over financial reporting and our disclosure controls and procedures, which include a review of theobjectives, design, implementation and effectiveness of the controls and the information generated for use in our periodic reports. In the course of our controlsevaluation, we sought (and seek) to identify data errors, control problems and to confirm that appropriate corrective actions, including process improvements, arebeing undertaken. This type of evaluation is conducted on a quarterly basis so that the conclusions concerning the effectiveness of our controls can be reported inour periodic reports.A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will besatisfied. Internal controls over financial reporting and disclosure controls and procedures are designed to give reasonable assurance that they are effective andachieve their objectives. We cannot provide absolute assurance that all possible future control issues have been detected. These inherent limitations include thepossibility that our judgments can be faulty and that isolated breakdowns can occur because of human error or mistake. The design of our system of controls isbased in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed absolutely in achieving ourstated goals under all potential future or unforeseeable conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to errorcould occur without being detected.We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is determined.We are subject to interest rate risk on floating interest rate borrowings under our revolving credit facility. Borrowings under our revolving credit facility useLondon Interbank Offering Rate (“LIBOR”) as a benchmark for establishing the interest rate. In July 2017, the Financial Conduct Authority (the regulatoryauthority over LIBOR) stated they will plan for a phase out of regulatory oversight of LIBOR after 2021 to allow for an orderly transition to an alternativereference rate. Although the full impact of the transition away from LIBOR, including the discontinuance of LIBOR publication and the adoption of a replacementrate for LIBOR, remains unclear, these changes may have an adverse impact on our financing costs and any floating rate indebtedness we may incur.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesAt September 30, 2019, we maintained branch offices, warehouses, sales facilities and administrative offices at 79 locations. Substantially all of our facilities areleased. We lease our executive office located in Greenwich, Connecticut and our corporate office located in Houston, Texas. We believe that our properties areadequate for our current needs and that suitable additional or replacement space will be available as required. For a breakdown of our offices by segment, see Item1. “Business —Operating Segments” of this Annual Report on Form 10-K.17 Item 3. Legal ProceedingsFor further information regarding legal proceedings, see Note 18, “Commitments and Contingencies — Legal Matters” in the notes to our Consolidated FinancialStatements.Item 4. Mine Safety DisclosuresNone.18 PART IIItem 5. Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock trades on the NASDAQ Global Market under the ticker symbol “IESC.”As of December 4, 2019, the closing market price of our common stock was $21.38 per share and there were approximately 341 holders of record.We have never declared or paid dividends on our common stock. We intend to retain any future earnings and do not expect to pay cash dividends in the foreseeablefuture.Stock Repurchase ProgramIn 2015, our Board of Directors authorized a stock repurchase program for the purchase from time to time of up to 1.5 million shares of the Company’s commonstock, and on May 2, 2019, authorized the repurchase from time to time of up to an additional 1,000,000.0 million shares of the Company's common stock underthe stock repurchase program. Share purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions orotherwise. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractualrestrictions and other factors. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which allows repurchases under pre-set termsat times when the Company might otherwise be prevented from purchasing under insider trading laws or because of self-imposed blackout periods. The programdoes not require the Company to purchase any specific number of shares and may be modified, suspended or reinstated at any time at the Company’s discretionand without notice. During the year ended September 30, 2019, we repurchased 467,819 shares of common stock at an average price of $17.34 per share for a totalaggregate purchase price of $8.1 million. The Company had 1.3 million shares remaining under its stock repurchase authorization at September 30, 2019.The following table presents information with respect to purchases of common stock by the Company during the three months ended September 30, 2019:PeriodTotal Number ofShares PurchasedAverage PricePaid Per ShareTotal Number ofShares Purchased asPart of a PubliclyAnnounced PlanMaximum Number of SharesThat May Yet Be PurchasedUnder the Publicly AnnouncedPlan as of September 30, 2019July 1, 2019 – July 31, 20192,818$18.002,8181,323,039August 1, 2019 – August 31, 201955,954$18.8455,9541,267,085September 1, 2019 – September 30, 201910,100$18.8410,1001,256,985Total68,872$18.8068,8721,256,985Five-Year Stock Performance GraphThe graph below compares the cumulative five year total return provided shareholders on IES Holdings, Inc.'s common stock relative to the cumulative totalreturns of the Russell 2000 index and a customized peer group of four companies that includes: Comfort Systems USA Inc., MYR Group Inc., SterlingConstruction Company Inc. and Team Inc. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in theRussell 2000 index, and in the peer group on September 30, 2014, and its relative performance is tracked through September 30, 2019.19 Comparison of Five Year Cumulative Total Return*Among IES Holdings, Inc., the Russell 2000 Index, and a Peer Group*$100 invested on 9/30/14 in stock or index, including reinvestment of dividends. Fiscal year ending September 30. Year Ended September 30, 2014 2015 2016 2017 2018 2019IES Holdings, Inc.$100.00 93.58 215.64 209.70 236.36 249.58Russell 2000$100.00 101.25 116.91 141.16 162.67 148.21Peer Group$100.00 112.69 133.28 156.57 203.36 172.5820 Item 6. Selected Financial DataThe following selected consolidated historical financial information for IES should be read in conjunction with the audited historical Consolidated FinancialStatements of IES Holdings, Inc. and subsidiaries, and the notes thereto, set forth in Item 8, “Financial Statements and Supplementary Data” of this AnnualReport on Form 10-K. Year Ended September 30, 2019 2018 2017 2016 2015 (In Thousands, Except Share Information) Continuing Operations: Revenues$1,076,996 $876,828 $810,744 $695,993 $573,857 Cost of services894,893 726,866 670,246 569,013 473,966 Gross profit182,103 149,962 140,498 126,980 99,891 Selling, general and administrative expenses140,575 123,920 120,370 100,558 81,416 Contingent consideration(374) 103 (145) 652 — Loss (gain) on sale of assets52 (15) (69) 810 (13) Operating Income41,850 25,954 20,342 24,960 18,488 Interest and other (income) expense: Interest expense1,857 1,946 1,702 1,282 1,130 Other income, net(148) (340) (165) (83) (180) Income from operations before income taxes40,141 24,348 18,805 23,761 17,538 Provision (benefit) for income taxes6,663 38,151 5,211 (97,117) 661 Net income (loss) from continuing operations33,478 (13,803) 13,594 120,878 16,877 Discontinued operations: Loss from discontinued operations— — — — (339) Net loss discontinued operations— — — — (339) Net income (loss)33,478 (13,803) 13,594 120,878 16,538 Net income attributable to noncontrolling interest(272) (354) (172) (100) — Net income (loss) attributable to IES Holdings, Inc.$33,206 $(14,157) $13,422 $120,778 $16,538 Basic earnings (loss) per share attributable to IES Holdings,Inc.: Continuing operations$1.56 $(0.67) $0.62 $5.63 $0.79 Discontinued operations— — — — (0.02) Total$1.56 $(0.67) $0.62 $5.63 $0.77 Diluted earnings (loss) per share attributable to IES Holdings,Inc.: Continuing operations$1.55 $(0.67) $0.62 $5.62 $0.79 Discontinued operations— — — — (0.02) Total$1.55 $(0.67) $0.62 $5.62 $0.77 Shares used to calculate earnings (loss) per share Basic21,082,012 21,196,388 21,280,549 21,279,342 21,480,622 Diluted21,315,245 21,196,388 21,533,254 21,492,339 21,526,188 Year Ended September 30, 2019 2018 2017 2016 2015 (In Thousands, Except Share Information) Balance Sheet Data: Cash and cash equivalents$18,934 $26,247 $28,290 $32,961 $49,360 Working capital, exclusive of cash84,049 72,029 52,834 43,716 31,601 Total assets445,258 421,994 424,494 394,340 225,679 Total debt299 29,564 29,434 29,257 9,207 Total stockholders' equity246,248 220,407 236,704 223,405 101,41421 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the notes thereto, set forth inItem 8.“Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. For additional information, see “Disclosure Regarding ForwardLooking Statements” in Part I of this Annual Report on Form 10-K.OVERVIEWExecutive OverviewPlease refer to Item 1. “Business” of this Annual Report on Form 10-K for a discussion of the Company’s services and corporate strategy. IES Holdings, Inc., aDelaware corporation, is a holding company that owns and manages operating subsidiaries, comprised of providers of industrial products and infrastructureservices to a variety of end markets. Our operations are currently organized into four principal business segments: Commercial & Industrial, Communications,Infrastructure Solutions and Residential.Industry TrendsOur performance is affected by a number of trends that drive the demand for our services. In particular, the markets in which we operate are exposed to manyregional and national trends such as the demand for single and multi-family housing, the need for mission critical facilities as a result of technology-drivenadvancements, the degree to which in-house maintenance departments outsource maintenance and repair work, output levels and equipment utilization at heavyindustrial facilities, demand for our rail and infrastructure services and custom engineered products, and changes in commercial, institutional, public infrastructureand electric utility spending. Over the long term, we believe that there are numerous factors that could positively drive demand and affect growth within theindustries in which we operate, including (i) population growth, which will increase the need for commercial and residential facilities, (ii) aging publicinfrastructure, which must be replaced or repaired, (iii) an increasing demand for data storage, (iv) increased emphasis on environmental and energy efficiency,which may lead to both increased public and private spending, and (v) demand for natural gas which is expected to spur the construction of and modifications toheavy industrial facilities. However, there can be no assurance that we will not experience a decrease in demand for our services due to economic, technological orother factors beyond our control, including weakness in the oil and gas sector, interest rate changes, increases in steel and commodity prices and other economicfactors, which may reduce the demand for housing including in the Texas region, where our Residential division operates and may impact levels of construction.For a further discussion of the industries in which we operate, please see Item 1. “Business - Operating Segments” of this Annual Report on Form 10-K.Business OutlookWhile there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previousinvestment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2019 as comparedto fiscal 2018. Among our segments, year-over-year revenue growth rates during fiscal 2019 were driven primarily by organic growth.Provided that no significant deterioration in general economic conditions occurs, the Company expects total revenues from existing businesses to increase on ayear-over-year basis during fiscal 2020 due to an increase in overall demand for the services we provide, efforts to increase our market share, and current backloglevels. We remain focused on controlled growth within many of our markets which continue to experience highly competitive margins and increasing costs.To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash. Our ability togenerate cash depends on many externally influenced factors, including demand for our services, the availability of projects at margins acceptable to us, theultimate collectability of our receivables, our ability to borrow on our credit facility, and our ability to raise funds in the capital markets, among many otherfactors. We anticipate that the combination of cash on hand, cash flows from operations and available capacity under our credit facility will provide sufficient cashto enable us to meet our working capital needs, debt service requirements and capital expenditures for property and equipment through the next twelve months.We expect that our fixed asset requirements will range from $5.0 million to $7.0 million for the fiscal year ending on September 30, 2020, and we may acquirethese assets either through capital expenditures or through lease agreements. 22 RESULTS OF OPERATIONSWe report our operating results across our four operating segments: Commercial & Industrial, Communications, Infrastructure Solutions and Residential. Expensesassociated with our corporate office are classified separately. The following table presents selected historical results of operations of IES, as well as the results ofacquired businesses from the dates acquired. Year Ended September 30, 2019 2018 2017 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Revenues$1,076,996 100.0 % $876,828 100.0 % $810,744 100.0 % Cost of services894,893 83.1 % 726,866 82.9 % 670,246 82.7 % Gross profit182,103 16.9 % 149,962 17.1 % 140,498 17.3 % Selling, general and administrative expenses140,575 13.1 % 123,920 14.1 % 120,370 14.8 % Contingent consideration(374) — % 103 — % (145) — % Loss (gain) on sale of assets52 — % (15) — % (69) — % Operating income41,850 3.9 % 25,954 3.0 % 20,342 2.5 % Interest and other expense, net1,709 0.2 % 1,606 0.2 % 1,537 0.2 % Operating income before income taxes40,141 3.7 % 24,348 2.8 % 18,805 2.3 % Provision (benefit) for income taxes (1)6,663 0.6 % 38,151 4.4 % 5,211 0.6 %Net income (loss)33,478 3.1 % (13,803) (1.6)% 13,594 1.7 % Net income attributable to noncontrolling interest(272) — % (354) — % (172) — %Net income (loss) attributable to IES Holdings, Inc.$33,206 3.1 % $(14,157) (1.6)% $13,422 1.7 %(1)The year ended September 30, 2018 includes a charge of $31.3 million to re-measure our net deferred taxes in connection with the Tax Cuts and Jobs Act.2019 Compared to 2018Consolidated revenues for the year ended September 30, 2019, were $200.2 million higher than for the year ended September 30, 2018, an increase of 22.8%, withincreases at all of our operating segments, driven by strong demand.Our overall gross profit percentage decreased slightly to 16.9% during the year ended September 30, 2019, as compared to 17.1% during the year ended September30, 2018. Gross profit as a percentage of revenue increased at our Infrastructure Solutions and Residential segments but decreased at our Commercial & Industrialand Communications segments, as discussed in further detail for each segment below.Selling, general and administrative expenses include costs not directly associated with performing work for our customers. These costs consist primarily ofcompensation and benefits related to corporate, segment and branch management (including incentive-based compensation), occupancy and utilities, training,professional services, information technology costs, consulting fees, travel and certain types of depreciation and amortization. We allocate certain corporateselling, general and administrative costs across our segments as we believe this more accurately reflects the costs associated with operating each segment. During the year ended September 30, 2019, our selling, general and administrative expenses were $140.6 million, an increase of $16.7 million, or 13.4%, over theyear ended September 30, 2018, driven by increased personnel costs at our operating segments in connection with their growth. This increase also includes a $4.2million increase in expenses at the corporate level, primarily related to an increase in stock-based compensation expense, as well as a severance payment to ourformer President, who stepped down in March 2019. However, selling, general and administrative expense as a percentage of revenue decreased from 14.1% forthe year ended September 30, 2018, to 13.1% for the year ended September 30, 2019, as we benefited from the increased scale of our operations.2018 Compared to 2017Consolidated revenues for the year ended September 30, 2018, were $66.1 million higher than for the year ended September 30, 2017, an increase of 8.2%.Revenues increased within our Commercial & Industrial, Infrastructure Solutions, and Residential segments driven by an increase in demand for their serviceofferings combined with continued improvement of conditions in the markets in which they operate. Businesses acquired in fiscal 2017 and 2018 contributed $61.0million of the revenue increase year over year, partially offset by23 a $23.7 million decrease in revenue at the Denver and Roanoke branches of our Commercial & Industrial segment, where the wind-down of operations thatoccurred over the last 18 months is substantially complete.Our overall gross profit percentage decreased slightly to 17.1% during the year ended September 30, 2018, as compared to the year ended September 30, 2017.Businesses acquired in fiscal 2017 and 2018 contributed an additional $6.6 million of gross profits for the year ended September 30, 2018, as compared with theyear ended September 30, 2017. Gross profit as a percentage of revenue increased at our Commercial & Industrial and Communications segments and decreased atour Infrastructure Solutions and Residential segments, as discussed in further detail for each segment below.During the year ended September 30, 2018, our selling, general and administrative expenses were $123.9 million, an increase of $3.6 million, or 2.9%, ascompared to the year ended September 30, 2017. The increase is primarily attributable to expense incurred at businesses acquired during fiscal 2017 and 2018,which contributed $6.0 million of the increase year over year. This increase was partly offset by a reduction in variable compensation expense. On a consolidatedbasis, our selling, general and administrative expense decreased slightly as a percentage of revenue from 14.8% for the year ended September 30, 2017, to 14.1%for the year ended September 30, 2018, largely as a result of decreased personnel costs and intangible amortization expense.Commercial & Industrial2019 Compared to 2018 Year Ended September 30, 2019 2018 $ % $ % (Dollars in thousands, Percentage of revenues)Revenue$305,624 100.0 % $274,299 100.0 %Cost of services275,722 90.2 % 244,656 89.2 %Gross Profit29,902 9.8 % 29,643 10.8 %Selling, general and administrative expenses27,815 9.1 % 27,031 9.9 %Contingent consideration— — % (100) — %Gain on sale of assets(30) — % (37) — %Operating income2,117 0.7 % 2,749 1.0 %Revenue. Revenues in our Commercial & Industrial segment increased $31.3 million, or 11.4%, during the year ended September 30, 2019, compared to the yearended September 30, 2018. The increase in revenue over this period was driven by an increase in large agricultural and other projects in the Midwest.Gross Profit. Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2019 increased by $0.3 million, or 0.9%, as compared tothe year ended September 30, 2018. We benefited from higher volumes; however, these benefits were offset by certain project inefficiencies during the second halfof the year. As a percentage of revenue, gross profit decreased from 10.8% for the year ended September 30, 2018, to 9.8% for the year ended September 30, 2019,as a result of these project inefficiencies.Selling, General and Administrative Expenses. Our Commercial & Industrial segment’s selling, general and administrative expenses during the year endedSeptember 30, 2019, increased $0.8 million, or 2.9%, compared to the year ended September 30, 2018, but decreased 1.0% as a percentage of revenue, as webenefited from the increased scale of our operations and a focus on controlling costs.24 2018 Compared to 2017 Year Ended September 30, 2018 2017 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$274,299 100.0 % $227,606 100.0 %Cost of services244,656 89.2 % 208,619 91.7 %Gross profit29,643 10.8 % 18,987 8.3 %Selling, general and administrative expenses27,031 9.9 % 20,170 8.8 %Contingent consideration(100) — % — — %Gain on sale of assets(37) — % (32) — %Operating income (loss)2,749 1.0 % (1,151) (0.5)%Revenue. Revenues in our Commercial & Industrial segment increased $46.7 million, or 20.5%, during the year ended September 30, 2018, as compared to theyear ended September 30, 2017. The increase in revenue over this period was driven by our 2017 business acquisitions, which contributed $42.7 million ofadditional revenue during the year ended September 30, 2018 compared to the year ended September 30, 2017. This increase was partly offset by a $23.7 decreasein revenue attributable to the winding down of operations at our Denver and Roanoke locations for the year ended September 30, 2018, as compared with the yearended September 30, 2017. Additionally, increased bid volume at several of our branches and improving market conditions in certain areas also contributed to theoverall increase in revenues.Gross Profit. Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2018 increased by $10.7 million, or 56.1%, as compared tothe year ended September 30, 2017. As a percentage of revenue, gross profit increased from 8.3% for the year ended September 30, 2017, to 10.8% for the yearended September 30, 2018. The increase was driven by $5.9 million of additional gross profit contributed by our fiscal 2017 business acquisitions during the yearended September 30, 2018, compared to the year ended September 30, 2017. Additionally, for the year ended September 30, 2018, gross margin at our Denver andRoanoke branches, where the wind down of operations is substantially complete, improved by $4.7 million compared with the year ended September 30, 2017.This increase was partly offset by a $1.9 million charge to adjust the contract value on a large project based on the terms of a memorandum of agreement.Selling, General and Administrative Expenses. Our Commercial & Industrial segment’s selling, general and administrative expenses during the year endedSeptember 30, 2018, increased $6.9 million, or 34.0%, compared to the year ended September 30, 2017, and increased 1.1% as a percentage of revenue. Theincrease was driven by our fiscal 2017 business acquisitions, where selling, general and administrative expense for the year ended September 30, 2018, increasedby $4.1 million. The remaining increase relates primarily to employee expense associated with management hired to provide additional oversight at the regionaland branch levels.During fiscal 2017, we completed a detailed review of the operations of our Commercial & Industrial segment and decided to wind down operations at our Denver,Colorado and Roanoke, Virginia branches within our Commercial & Industrial segment. At September 30, 2018, we had approximately $1.5 million of backlogremaining at these branches. The following table summarizes the results of our Denver and Roanoke branches, which are included in the consolidated Commercial& Industrial segment results shown above: Year Ended September 30,2018 2017Revenues$8,572 $32,231Cost of services9,441 37,819Selling, general and administrative expenses1,772 2,848Gain on sale of assets(1) (27)Operating loss$(2,640) $(8,409)25 Communications2019 Compared to 2018 Year Ended September 30, 2019 2018 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$321,246 100.0 % $219,655 100.0 %Cost of services264,746 82.4 % 179,518 81.7 %Gross Profit56,500 17.6 % 40,137 18.3 %Selling, general and administrative expenses31,850 9.9 % 26,003 11.8 %Contingent consideration(97) — % (85) — %Gain on sale of assets(6) — % (4) — %Operating Income24,753 7.7 % 14,223 6.5 %Revenue. Our Communications segment’s revenues increased by $101.6 million, or 46.3%, during the year ended September 30, 2019, compared to the year endedSeptember 30, 2018. This increase primarily resulted from increased demand from several of our data center customers. Revenues in our Communicationssegment can vary from period to period based on the capital spending cycles of our customers.Gross Profit. Our Communications segment’s gross profit during the year ended September 30, 2019, increased $16.4 million, or 40.8%, as compared to the yearended September 30, 2018. While total gross profits increased in connection with higher volumes, gross profit as a percentage of revenue decreased 0.7% to 17.6%for the year ended September 30, 2019, as we took on a larger proportion of cost-plus arrangements. These arrangements provide us with a reimbursement for ourcosts plus a markup, and are typically lower margin, but also lower risk, as compared with our fixed-cost arrangements.Selling, General and Administrative Expenses. Our Communications segment’s selling, general and administrative expenses increased $5.8 million, or 22.5%during the year ended September 30, 2019, as compared to the year ended September 30, 2018. The increase is a result of higher personnel cost, particularlyrelated to continuing investment to support the growth of the business, along with higher incentive compensation in connection with improved profitability and cashflows. Selling, general and administrative expenses as a percentage of revenues in the Communications segment decreased by 1.9% to 9.9% of segment revenueduring the year ended September 30, 2019, compared to the year ended September 30, 2018, as we benefited from the increased scale of our operations.2018 Compared to 2017 Year Ended September 30, 2018 2017 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$219,655 100.0 % $225,275 100.0 %Cost of services179,518 81.7 % 187,419 83.2 %Gross Profit40,137 18.3 % 37,856 16.8 %Selling, general and administrative expenses26,003 11.8 % 24,219 10.8 %Contingent consideration(85) — % — — %Gain on sale of assets(4) — % (1) — %Operating Income14,223 6.5 % 13,638 6.0 %Revenue. Our Communications segment’s revenues decreased by $5.6 million, or 2.5%, during the year ended September 30, 2018, as compared to the year endedSeptember 30, 2017. This decrease in revenue was primarily the result of two large projects with non-recurring customers we completed in fiscal 2017: $7.9million of revenue from a large system upgrade project for a school district, and $5.6 million related to construction of a sporting venue. The decrease in revenuewas offset by growth with our data center customers, as well as the acquisition of Azimuth Communications, Inc. (“Azimuth”), which contributed $4.3 million ofadditional revenue during the year ended September 30, 2018 compared to the year ended September 30, 2017. Our revenues for the year ended September 30,2018, were also affected by the timing of capital spending by certain of our data center customers. Revenues in our Communications segment can vary based onthe capital spending cycles of our customers.26 Gross Profit. Our Communications segment’s gross profit during the year ended September 30, 2018, increased $2.3 million, or 6.0%, as compared to the yearended September 30, 2017. Gross profit as a percentage of revenue increased 1.5% to 18.3% for the year ended September 30, 2018. The increase was drivenprimarily by improved project execution. As revenue growth slowed in 2018, our margins benefitted from lower training and hiring costs that often affect us duringperiods of higher growth. Additionally, our acquisition of Azimuth during fiscal 2018 contributed $1.0 million of additional gross profit during the year endedSeptember 30, 2018, compared to the year ended September 30, 2017.Selling, General and Administrative Expenses. Our Communications segment’s selling, general and administrative expenses increased $1.8 million, or 7.4% duringthe year ended September 30, 2018, as compared to the year ended September 30, 2017. Selling, general and administrative expenses as a percentage of revenuesin the Communications segment increased to 11.8% of segment revenue during the year ended September 30, 2018, compared to 10.8% for the year endedSeptember 30, 2017. The increase was driven by our acquisition of Azimuth during fiscal 2018, which incurred selling, general and administrative expense for theyear ended September 30, 2018, of $1.6 million, which includes amortization of intangible assets.Infrastructure2019 Compared to 2018 Year Ended September 30, 2019 2018 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$136,790 100.0 % $97,163 100.0%Cost of services105,863 77.4 % 75,337 77.5%Gross Profit30,927 22.6 % 21,826 22.5%Selling, general and administrative expenses18,664 13.6 % 18,293 18.8%Contingent consideration(277) (0.2)% 288 0.3%Loss on sale of assets105 0.1 % 18 —%Operating Income12,435 9.1 % 3,227 3.3%Revenue. Revenues in our Infrastructure Solutions segment increased by $39.6 million during the year ended September 30, 2019, an increase of 40.8% comparedto the year ended September 30, 2018. The increase in revenue relates primarily to our generator enclosure business, driven by increased demand for enclosures tobe used at data centers. We also experienced an increase in demand for our motor repair services.Gross Profit. Our Infrastructure Solutions segment’s gross profit during the year ended September 30, 2019, increased by $9.1 million, as compared to the yearended September 30, 2018, primarily as a result of increased volumes. Gross profit as a percent of revenue slightly increased to 22.6% for the year endedSeptember 30, 2019.Selling, General and Administrative Expenses. Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year endedSeptember 30, 2019, increased by $0.4 million compared to the year ended September 30, 2018. However, the selling, general and administrative expenses as apercentage of revenue decreased from 18.8% for the year ended September 30, 2018, to 13.6% for the year ended September 30, 2019. Through a focus oncontrolling costs, we were able to scale our business effectively without adding significant general and administrative expense.27 2018 Compared to 2017 Year Ended September 30, 2018 2017 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$97,163 100.0% $83,824 100.0 %Cost of services75,337 77.5% 63,399 75.6 %Gross Profit21,826 22.5% 20,425 24.4 %Selling, general and administrative expenses18,293 18.8% 17,859 21.3 %Contingent consideration288 0.3% (145) (0.1)%(Gain)/Loss on sale of assets18 —% (79) (0.1)%Operating Income3,227 3.3% 2,790 3.3 %Revenue. Revenues in our Infrastructure Solutions segment increased by $13.3 million during the year ended September 30, 2018, an increase of 15.9% comparedto the year ended September 30, 2017. The increase was primarily driven by $14.0 million of additional revenue contributed by Freeman Enclosure Systems, LLC(“Freeman”), which we acquired during the second quarter of fiscal 2017. An increase in revenues from the manufacture of bus duct was offset by a decrease inrevenue from our motor repair business, which remains highly dependent on the steel industry.Gross Profit. Our Infrastructure Solutions segment’s gross profit during the year ended September 30, 2018, increased by $1.4 million, as compared to the yearended September 30, 2017. Gross profit as a percent of revenue decreased to 22.5% for the year ended September 30, 2018. Margins improved year over year atboth our bus duct manufacturing business and our motor repair business. However, our overall gross margin was affected by the mix of work performed, asFreeman has lower margins than our motor repair business, but represented a larger percentage of our total revenues.Selling, General and Administrative Expenses. Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year endedSeptember 30, 2018, increased by $0.4 million compared to the year ended September 30, 2017. The increase was primarily the result of $0.3 million increase ingeneral and administrative costs incurred at Freeman, which was acquired during the second quarter of fiscal 2017. Additional selling and administrative costs insupport of growth of the business, were largely offset by a decrease in intangible amortization expense related to the acquisition of Technibus Inc. in fiscal 2016.Residential2019 Compared to 2018 Year Ended September 30, 2019 2018 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$313,336 100.0 % $285,711 100.0%Cost of services248,562 79.3 % 227,355 79.6%Gross Profit64,774 20.7 % 58,356 20.4%Selling, general and administrative expenses46,864 15.0 % 41,401 14.5%(Gain)/Loss on sale of assets(17) — % 8 —%Operating Income17,927 5.7 % 16,947 5.9%Revenue. Our Residential segment’s revenues increased by $27.6 million, or 9.7%, during the year ended September 30, 2019, as compared to the year endedSeptember 30, 2018. The increase was driven by increases in our single-family business, where revenues increased by $22.0 million, and our multi-familybusinesses, where revenues increased by $8.9 million for the year ended September 30, 2019, compared with the year ended September 30, 2018. This increase waspartly offset by a $3.2 million decrease in our solar and service revenues for the year ended September 30, 2019, compared with the prior year.Gross Profit. During the year ended September 30, 2019, our Residential segment experienced a $6.4 million, or 11.0%, increase in gross profit as compared to theyear ended September 30, 2018. The increase in gross profit was driven primarily by higher volumes. Gross margin as a percentage of revenue increased 0.3% to20.7% during the year ended September 30, 2019, as compared with the year ended September 30, 2018, as we benefited from improved commodity prices and theincreased scale of our operations.28 Selling, General and Administrative Expenses. Our Residential segment experienced a $5.5 million, or 13.2%, increase in selling, general and administrativeexpenses during the year ended September 30, 2019, compared to the year ended September 30, 2018. This increase was driven by increased compensation expensein connection with a growing business, including both incentive profit sharing for division management and increased headcount. Selling, general andadministrative expenses as a percentage of revenues in the Residential segment increased by 0.5% to 15.0% of segment revenue during the year ended September30, 2019.2018 Compared to 2017 Year Ended September 30, 2018 2017 $ % $ % (Dollars in thousands, Percentage of revenues)Revenues$285,711 100.0% $274,039 100.0%Cost of services227,355 79.6% 210,809 76.9%Gross Profit58,356 20.4% 63,230 23.1%Selling, general and administrative expenses41,401 14.5% 43,689 16.0%Loss on sale of assets8 —% 43 —%Operating Income16,947 5.9% 19,498 7.1%Revenue. Our Residential segment’s revenues increased by $11.7 million, or 4.3%, during the year ended September 30, 2018, as compared to the year endedSeptember 30, 2017. The increase was driven by our single-family business, where revenues increased by $28.3 million for the year ended September 30, 2018,compared with the year ended September 30, 2017. Service and solar revenues also increased by $4.7 million for the year ended September 30, 2018, comparedwith the prior year. These increases were partly offset by a decrease in multi-family revenues, which declined by $21.3 million. While backlog was lower at thebeginning of fiscal 2018, we ended fiscal 2018 with backlog up approximately 28% over prior year.Gross Profit. During the year ended September 30, 2018, our Residential segment experienced a $4.9 million, or 7.7%, decrease in gross profit as compared to theyear ended September 30, 2017. The decrease in gross profit was driven primarily by an increase in copper and other commodity prices, as well as an increase inlabor costs, as a result of tightening labor markets. Gross margin as a percentage of revenue decreased 2.7% to 20.4% during the year ended September 30, 2018,as compared with the year ended September 30, 2017.Selling, General and Administrative Expenses. Our Residential segment experienced a $2.3 million, or 5.2%, decrease in selling, general and administrativeexpenses during the year ended September 30, 2018, compared to the year ended September 30, 2017, driven by decreased compensation expense, primarily as aresult of a decrease of $1.2 million in variable compensation and incentive costs associated with decreased profitability, partly offset by an increase in salary andtravel costs. Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased by 1.5% to 14.5% of segment revenueduring the year ended September 30, 2018. INTEREST AND OTHER EXPENSE, NET Year Ended September 30, 2019 2018 2017 (In thousands)Interest expense$1,539 $1,658 $1,408Deferred financing charges318 288 294Total interest expense1,857 1,946 1,702Other income, net(148) (340) (165)Total interest and other expense, net1,709 1,606 1,537Interest ExpenseDuring the year ended September 30, 2019, we incurred interest expense of $1.9 million primarily comprised of interest expense from our revolving credit facilitywith Wells Fargo Bank, N.A. (“Wells Fargo”), an average letter of credit balance of $6.6 million under our revolving credit facility and an average unused line ofcredit balance of $73.7 million. This compares to interest expense of $1.9 million29 for the year ended September 30, 2018, primarily comprised of interest expense from our revolving credit facility with Wells Fargo, an average letter of creditbalance of $6.6 million under our revolving credit facility and an average unused line of credit balance of $63.2 million.For the year ended September 30, 2017, we incurred interest expense of $1.7 million on a debt balance primarily comprised of our revolving credit facility withWells Fargo, an average letter of credit balance of $6.6 million under our revolving credit facility, and an average unused line of credit balance of $47.5 million.PROVISION FOR INCOME TAXESFor the year ended September 30, 2019, we recorded income tax expense of $6.7 million. Income tax expense was partly offset by a $4.0 million benefit related tothe recognition of previously unrecognized tax benefits.For the year ended September 30, 2018, we recorded income tax expense of $38.2 million. Income tax expense was partly offset by a $1.9 million benefit relatedto the recognition of previously unrecognized tax benefits. Our income tax expense included a charge of $31.3 million to re-measure our deferred tax assets andliabilities to reflect the impact from the enactment of the Tax Cuts and Jobs Act on December 22, 2017.For the year ended September 30, 2017, we recorded income tax expense of $5.2 million. Income tax expense was partly offset by a $3.7 million benefit related tothe recognition of previously unrecognized tax benefits.WORKING CAPITALDuring the year ended September 30, 2019, working capital exclusive of cash increased by $12.0 million from September 30, 2018, reflecting a $41.1 millionincrease in current assets excluding cash and a $29.1 million increase in current liabilities during the period, reflecting a continued investment in growing ourbusiness.During the year ended September 30, 2019, our current assets exclusive of cash increased to $277.5 million, as compared to $236.4 million as of September 30,2018. The increase primarily relates to a $34.7 million increase in accounts receivable, in connection with growth in our business. Days sales outstanding was 62 asof each of September 30, 2019 and 2018. While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liensagainst our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.During the year ended September 30, 2019, our total current liabilities increased by $29.1 million to $193.5 million, compared to $164.4 million as of September30, 2018, primarily related to an increase in accounts payable and accrued liabilities in connection with the growth of our business.SuretyMany customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a surety. These bonds provide aguarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors. If we fail to perform under theterms of our contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We mustreimburse the sureties for any expenses or outlays they incur on our behalf. To date, we have not been required to make any reimbursements to our sureties forbond-related costs.As is common in the surety industry, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time. We believe that our relationshipswith our sureties will allow us to provide surety bonds as they are required. However, current market conditions, as well as changes in our sureties' assessment ofour operating and financial risk, could cause our sureties to decline to issue bonds for our work. If our sureties decline to issue bonds for our work, our alternativeswould include posting other forms of collateral for project performance, such as letters of credit or cash, seeking bonding capacity from other sureties, or engagingin more projects that do not require surety bonds. In addition, if we are awarded a project for which a surety bond is required but we are unable to obtain a suretybond, the result could be a claim for damages by the customer for the costs of replacing us with another contractor.As of September 30, 2019, the estimated cost to complete our bonded projects was approximately $88.7 million. We believe the bonding capacity currentlyprovided by our sureties is adequate for our current operations and will be adequate for our operations for the foreseeable future. 30 LIQUIDITY AND CAPITAL RESOURCESAs of September 30, 2019, we had cash and cash equivalents of $18.9 million and $93.5 million of availability under our revolving credit facility. We anticipatethat the combination of cash on hand, cash flows from operations and available capacity under our revolving credit facility will provide sufficient cash to enable usto meet our working capital needs, debt service requirements and capital expenditures for property and equipment through the next twelve months. Our ability togenerate cash flow is dependent on many factors, including demand for our services, the availability of projects at margins acceptable to us, the ultimatecollectability of our receivables, and our ability to borrow on our revolving credit facility or raise funds in the capital markets, if needed.The Revolving Credit FacilityWe maintain a $100 million revolving credit facility with Wells Fargo that matures September 30, 2024, (as amended, the “Amended Credit Agreement”).Terms of the Amended Credit AgreementBorrowings under the Credit Facility may not exceed a “borrowing base” that is determined monthly by our lenders based on available collateral, primarily certainaccounts receivables, inventories, and equipment. Under the terms of the Amended Credit Agreement, amounts outstanding bear interest at a per annum rate equalto a Daily Three Month LIBOR (as defined in the Amended Credit Agreement), plus an interest rate margin, which is determined quarterly, based on the followingthresholds: Level Thresholds Interest Rate MarginI If Liquidity is less than 35% of the Maximum Revolver Amount at any time during the period 1.75 percentage points II If Liquidity is greater than or equal to 35% of the Maximum Revolver Amount at all times during the period and lessthan 50% of the Maximum Revolver Amount at any time during the period 1.50 percentage points III If Liquidity is greater than or equal to 50% of the Maximum Revolver Amount at all times during the period 1.25 percentage pointsIn addition, we are charged monthly in arrears for (1) an unused commitment fee of 0.25% per annum, (2) a collateral monitoring fee of $5 thousand per quarter,(3) a letter of credit fee based on the then-applicable interest rate margin and (4) certain other fees and charges as specified in the Amended Credit Agreement.The Amended Credit Agreement contains customary affirmative, negative and financial covenants, as well as events of default.As of September 30, 2019, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain:• a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailingfour-quarter basis at the end of each quarter, of at least 1.1 to 1.0; and• minimum Liquidity (as defined in the Amended Credit Agreement) of at least twenty percent (20%) of the Maximum Revolver Amount (as defined inthe Amended Credit Agreement), or $20 million; with, for purposes of this covenant, at least fifty percent (50%) of our Liquidity comprised of ExcessAvailability (as defined in the Amended Credit Agreement).At September 30, 2019, our Liquidity was $112.5 million and our Excess Availability was $93.5 million (or greater than 50% of minimum Liquidity), and ourFixed Charge Coverage Ratio was 4.7:1.0.Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve monthEBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and allRestricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind,amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the creditfacility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and allRestricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if any Loan Party makes an acquisition consentedto by Lender after the date of the Amended Credit Agreement, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period aftergiving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising outof events which are directly attributable to31 such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by the Lender).As defined in the Amended Credit Agreement, EBITDA is calculated as consolidated net income (or loss), less extraordinary gains, interest income, non-operatingincome and income tax benefits and decreases in any change in LIFO reserves, plus stock compensation expense, non-cash extraordinary losses (including, but notlimited to, a non-cash impairment charge or write-down), Interest Expense, income taxes, depreciation and amortization, increases in any change in LIFO reserves,and losses from the wind-down of our Denver and Roanoke branches, up to a maximum exclusion of $5 million for a given measurement period in each case,determined on a consolidated basis in accordance with GAAP; provided, that if any Loan party makes an acquisition consented to by Lender after the date of theAmended Credit Agreement, EBITDA for such fiscal period shall be calculated after giving pro forma effect to the acquisition assuming that such transaction hasoccurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factuallysupportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by Lender).If in the future our Liquidity falls below $20 million (or Excess Availability falls below 50% of our minimum Liquidity), our Fixed Charge Coverage Ratio is lessthan 1.1:1.0, or if we otherwise fail to perform or otherwise comply with certain of our covenants or other agreements under the Amended Credit Agreement, itwould result in an event of default under the Amended Credit Agreement, which could result in some or all of any indebtedness we may take on becomingimmediately due and payable.At September 30, 2019, we had $6.5 million in outstanding letters of credit with Wells Fargo and no outstanding borrowings.InvestmentsFrom time to time, the Company may invest in non-controlling positions in the debt or equity securities of other businesses. Our Board of Directors has approvedan investment policy that permits the Company to invest our cash in liquid and marketable securities that include equities and fixed income securities. Equitysecurities may include unrestricted, publicly traded stock that is listed on a major exchange or a national, over-the-counter market and that is appropriate for ourportfolio objectives, asset class, and/or investment style, and fixed income securities are required to have an investment grade credit quality at the time of purchase.Operating ActivitiesOur cash flow from operations is not only influenced by cyclicality, demand for our services, operating margins and the type of services we provide, but can alsobe influenced by working capital needs such as the timing of our receivable collections. Working capital needs are generally lower during our fiscal first andsecond quarters due to the seasonality that we experience in many regions of the country; however, a seasonal decline in working capital may be offset by needsassociated with higher growth or acquisitions.Operating activities provided net cash of $38.7 million during the year ended September 30, 2019, as compared to $12.2 million of net cash provided in the yearended September 30, 2018. The increase in operating cash flow resulted primarily from an increase in earnings, partly offset by an increase in working capital insupport of our growth. In particular increased accounts receivable resulted in cash outflows of $35.3 million, offset by cash inflows of $22.5 million driven byincreased accrued liabilities.Operating activities provided net cash of $12.2 million during the year ended September 30, 2018, as compared to $22.3 million of net cash provided in the yearended September 30, 2017. The decrease in operating cash flow is the result of an investment in working capital to support the growth of our business. Inparticular, costs in excess of billings increased by $18.1 million as a result of an increase in cost-plus work, where costs are typically billed later than in our typicalfixed-price arrangements, as well as an increase in orders for generator enclosures, which are billed when shipped. Investing ActivitiesIn the year ended September 30, 2019, net cash used in investing activities was $5.7 million as compared to $11.9 million of net cash used by investing activities inthe year ended September 30, 2018. Investing activities for the year ended September 30, 2019, include $6.3 million of capital expenditures.In the year ended September 30, 2018, net cash used in investing activities was $11.9 million as compared to $24.5 million of net cash used by investing activitiesin the year ended September 30, 2017. Investing activities for the year ended September 30, 2018, include $7.4 million for the acquisition of businesses, as well as$4.6 million of capital expenditures.32 Financing ActivitiesNet cash used in financing activities was $40.3 million in the year ended September 30, 2019, compared to $2.4 million used in the year ended September 30,2018. For the year ended September 30, 2019, we used $119.5 million to repay a portion of our revolving credit facility, partly offset by $89.3 million of additionalborrowings. We also used $9.8 million to repurchase our shares in conjunction with our stock repurchase program, as well as to satisfy statutory withholdingrequirements upon the vesting of employee stock compensation.Financing activities used net cash of $2.4 million in the year ended September 30, 2018, compared to $2.7 million used in the year ended September 30, 2017. Forthe year ended September 30, 2018, we used $2.1 million for the repurchase of the common stock under the Company’s stock repurchase program. Werepurchased an aggregate $1.6 million of common stock in open market transactions, pursuant to the stock repurchase program, and we used an additional $0.5million for the repurchase of common stock to satisfy employee payroll tax withholding obligations. CONTROLLING SHAREHOLDERTontine Associates, L.L.C. ("Tontine Associates"), together with its affiliates (collectively, “Tontine”), is the Company’s controlling stockholder, owningapproximately 58 percent of the Company’s outstanding common stock according to a Form 4 filed with the SEC by Tontine on October 3, 2019. Accordingly,Tontine has the ability to exercise significant control over our affairs, including the election of directors and most actions requiring the approval of shareholders.We are a party to a sublease agreement with Tontine Associates for corporate office space in Greenwich, Connecticut. The sublease extends through February 27,2023, with monthly payments due in the amount of approximately $8 thousand. The lease has terms at market rates, and payments by the Company are at a rateconsistent with that paid by Tontine Associates to its landlord.On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assistTontine in managing its investment in the Company. Subject to the terms and conditions set forth in the Observer Agreement, the Company granted Tontine theright, at any time that Tontine holds at least 20% of the outstanding common stock of the Company, to appoint a representative to serve as an observer to the Board(the “Board Observer”). The Board Observer, who shall serve at the discretion of and must be reasonably acceptable to those members of the Board who are notaffiliates of Tontine, shall have no voting rights or other decision making authority. Subject to the terms and conditions set forth in the Observer Agreement, solong as Tontine has the right to appoint a Board Observer, the Board Observer will have the right to attend and participate in meetings of the Board and thecommittees thereof, subject to confidentiality requirements, and to receive reimbursement for reasonable out-of-pocket expenses incurred in his or her capacity as aBoard Observer and such rights to coverage under the Company’s directors’ and officers’ liability insurance policy as are available to other directors.Jeffrey L. Gendell was appointed as a member of the Board of Directors and as Chairman of the Board in November 2016. He is the managing member andfounder of Tontine, and the brother of David B. Gendell, who has served as a member of our Board of Directors since February 2012, and who previously servedas Interim Director of Operations from November 2017 to January 2019, as Vice Chairman of the Board from November 2016 to November 2017 and as Chairmanof the Board from January 2015 to November 2016. David B. Gendell was an employee of Tontine from 2004 until December 31, 2017. OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONSAs is common in our industry, we have entered into certain off-balance sheet arrangements that expose us to increased risk. Our significant off-balance sheettransactions include commitments associated with non-cancelable operating leases, letter of credit obligations, firm commitments for materials and suretyguarantees.We enter into operating leases for many of our vehicle and equipment needs. These leases allow us to retain our cash when we do not own the vehicles orequipment, and we pay a monthly lease rental fee. At the end of the lease, we have no further obligation to the lessor. We may cancel or terminate a lease before theend of its term. Typically, we would be liable to the lessor for various lease cancellation or termination costs and the difference between the fair market value ofthe leased asset and the implied book value of the leased asset as calculated in accordance with the lease agreement.Some of our customers and vendors require us to post letters of credit as a means of guaranteeing performance under our contracts and ensuring payment by us tosubcontractors and vendors. If our customer has reasonable cause to effect payment under a letter of credit,33 we would be required to reimburse our creditor for the letter of credit. At September 30, 2019, $0.2 million of our outstanding letters of credit were to collateralizeour customers and vendors.Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral, as is common in the insurance industry. To date, wehave not had a situation where an underwriter has had reasonable cause to effect payment under a letter of credit. At September 30, 2019, $6.3 million of ouroutstanding letters of credit were to collateralize our insurance programs.From time to time, we may enter into firm purchase commitments for materials such as copper wire and aluminum wire, among others, which we expect to use inthe ordinary course of business. These commitments are typically for terms less than one year and require us to buy minimum quantities of materials at specifiedintervals at a fixed price over the term. As of September 30, 2019, we did not have any significant open purchase commitments.Many of our customers require us to post performance and payment bonds issued by a surety. Those bonds guarantee the customer that we will perform under theterms of a contract and that we will pay subcontractors and vendors. In the event that we fail to perform under a contract or pay subcontractors and vendors, thecustomer may demand the surety to pay or perform under our bond. Our relationship with our sureties is such that we will indemnify the sureties for any expensesthey incur in connection with any of the bonds they issue on our behalf and may be required to post collateral to support the bonds. To date, we have not incurredany material costs to indemnify our sureties for expenses they incurred on our behalf.As of September 30, 2019, our future contractual obligations due by September 30 of each of the following fiscal years for commenced agreements include (inthousands): Less than 1 to 3 3 to 5 More than 1 Year Years Years 5 Years TotalLong-term debt obligations$— $299 $— $— $299Operating lease obligations8,101 10,985 5,269 3,595 27,950Total$8,101 $11,284 $5,269 $3,595 $28,249Our other commitments expire by September 30 of each of the following fiscal years (in thousands): 2020 2021 2022 Thereafter TotalStandby letters of credit$3,018 $3,450 $— $— $6,468Total$3,018 $3,450 $— $— $6,468CRITICAL ACCOUNTING POLICIESThe discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared inaccordance with GAAP. The preparation of our Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amountsof assets and liabilities, disclosures of contingent assets and liabilities known to exist as of the date the Consolidated Financial Statements, and the reportedamounts of revenues and expenses recognized during the periods presented. We review all significant estimates affecting our Consolidated Financial Statements ona recurring basis and record the effect of any necessary adjustments prior to their publication. Judgments and estimates are based on our beliefs and assumptionsderived from information available at the time such judgments and estimates are made. Uncertainties with respect to such estimates and assumptions are inherentin the preparation of financial statements. There can be no assurance that actual results will not differ from those estimates.Accordingly, we have identified the accounting principles which we believe are most critical to our reported financial status by considering accounting policiesthat involve the most complex or subjective decisions or assessments. We identified our most critical accounting policies to be those related to revenuerecognition, accounting for business combinations, the assessment of goodwill and asset impairment, our allowance for doubtful accounts receivable, the recordingof our insurance liabilities and estimation of the valuation allowance for deferred tax assets, and unrecognized tax benefits. These accounting policies, as well asothers, are described in Note 2, “Summary of Significant Accounting Policies” in the notes to our Consolidated Financial Statements and at relevant sections inthis discussion and analysis. Revenue Recognition. We enter into contracts principally on the basis of competitive bids. We frequently negotiate the final terms and prices of those contractswith the customer. Although the terms of our contracts vary considerably, approximately 88% of our revenues are based on either a fixed price or unit price basis inwhich we agree to do the work for a fixed amount for the entire project (fixed price) or for units of work performed (unit price). Approximately 12% of ourrevenues are earned from contracts where we are paid on a time and materials basis. Our most significant cost drivers are the cost of labor, the cost of materials andthe cost of casualty and34 health insurance. These costs may vary from the costs we originally estimated. Variations from estimated contract costs along with other risks inherent inperforming fixed price and unit price contracts may result in actual revenue and gross profits or interim projected revenue and gross profits for a project differingfrom those we originally estimated and could result in losses on projects. Depending on the size of a particular project, variations from estimated project costscould have a significant impact on our operating results for any fiscal quarter or year. We complete most of our projects within one year. We frequently provide service and maintenance work under open-ended, unit price master service agreementswhich are renewable annually. We recognize revenue on service, time and material work when services are performed. Work performed under a constructioncontract generally provides that the customers accept completion of progress to date and compensate us for services rendered, measured in terms of units installed,hours expended or some other measure of progress. Revenues from construction contracts are recognized on the percentage-of-completion method. Revenuesrecognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 60% of our total revenue for theyear ended September 30, 2019. The percentage-of-completion method for construction contracts is measured principally by the percentage of costs incurred andaccrued to date for each contract to the estimated total costs for each contract at completion. We generally consider contracts substantially complete upon departurefrom the work site and acceptance by the customer. Contract costs include all direct material and labor costs and those indirect costs related to contractperformance, such as indirect labor, supplies, tools, repairs and depreciation costs. Changes in job performance, job conditions, estimated contract costs,profitability and final contract settlements may result in revisions to costs and income, and the effects of such revisions are recognized in the period in which therevisions are determined. Provisions for total estimated losses on uncompleted contracts are made in the period in which such losses are determined.We generally do not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project. When significant pre‑contract costsare incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract.The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed that management believes will bebilled and collected within the next twelve months. The current liability “Billings in excess of costs and estimated earnings” represents billings in excess ofrevenues recognized. Costs and estimated earnings in excess of billings are amounts considered recoverable from customers based on different measures ofperformance, including achievement of specific milestones, completion of specified units or completion of the contract. Also included in this asset, from time totime, are claims and unapproved change orders, which include amounts that we are in the process of collecting from our customers or agencies for changes incontract specifications or design, contract change orders in dispute or unapproved as to scope and price, or other related causes of unanticipated additional contractcosts. Claims and unapproved change orders are recorded at estimated realizable value when collection is probable and can be reasonably estimated. We do notrecognize profits on construction costs incurred in connection with claims. Claims made by us involve negotiation and, in certain cases, litigation. Such litigationcosts are expensed as incurred.Business Combinations. In accounting for business combinations, certain assumptions and estimates are employed in determining the fair value of assets acquired,evaluating the fair value of liabilities assumed, as well as in determining the allocation of goodwill to the appropriate reporting unit. These estimates may beaffected by factors such as changing market conditions affecting the industries in which we operate. The most significant assumptions requiring judgment involveidentifying and estimating the fair value of intangible assets and the associated useful lives for establishing amortization periods. To finalize purchase accountingfor significant intangible assets and liabilities, we utilize the services of independent valuation specialists to assist in the determination of the fair value.Valuation of Intangibles and Long-Lived Assets. We evaluate goodwill for potential impairment at least annually at year end; however, if impairment indicatorsexist, we will evaluate as needed. In evaluating goodwill for impairment, we have the option to first assess qualitative factors to determine whether it is more likelythan not that the fair value of a reporting unit is greater than its carrying value. If we determine that it is more likely than not that the carrying value of a reportingunit is greater than its fair value, then we perform an impairment test by calculating the fair value of the reporting unit and comparing this calculated fair value withthe carrying value of the reporting unit. We estimate the fair value of the reporting unit based on the market approach and income approach. Included in thisevaluation are certain assumptions and estimates to determine the fair values of reporting units such as estimates of future cash flows and discount rates, as well asassumptions and estimates related to the valuation of other identified intangible assets. Changes in these assumptions and estimates or significant changes to themarket value of our common stock could materially impact our results of operations or financial position. We did not record goodwill impairment during the yearsended September 30, 2019, 2018 or 2017.Each reporting period, we assess impairment indicators related to long-lived assets and intangible assets. If we determine impairment indicators exist, we conductan evaluation to determine whether any impairment has occurred. This evaluation includes certain assumptions and estimates to determine fair value of assetgroups, including estimates about future cash flows and discount rates, among others. Changes in these assumptions and estimates could materially impact ourresults of operations or financial projections. No impairment charges were recorded in the years ended September 30, 2019, 2018 or 2017.35 Current and Non-Current Accounts Receivable and Provision for Doubtful Accounts. We provide an allowance for doubtful accounts for unknown collectionissues, in addition to reserves for specific accounts receivable where collection is considered doubtful. Inherent in the assessment of the allowance for doubtfulaccounts are certain judgments and estimates including, among others, our customers’ access to capital, our customers’ willingness to pay, general economicconditions, and the ongoing relationships with our customers. In addition to these factors, the method of accounting for construction contracts requires the reviewand analysis of not only the net receivables, but also the amount of billings in excess of costs and costs in excess of billings. The analysis management utilizes toassess collectability of our receivables includes detailed review of older balances, analysis of days sales outstanding where we include in the calculation, inaddition to accounts receivable balances net of any allowance for doubtful accounts, the level of costs in excess of billings netted against billings in excess of costsand the ratio of accounts receivable, net of any allowance for doubtful accounts plus the level of costs in excess of billings, to revenues. These analyses provide anindication of those amounts billed ahead of or behind the recognition of revenue on our construction contracts and are important to consider in understanding theoperational cash flows related to our revenue cycle.Risk-Management. We are insured for workers’ compensation, automobile liability, general liability, construction defects, pollution, employment practices andemployee-related health care claims, subject to deductibles. Our general liability program provides coverage for bodily injury and property damage. Losses up tothe deductible amounts are accrued based upon our estimates of the liability for claims incurred and an estimate of claims incurred but not reported. The accrualsare derived from actuarial studies, known facts, historical trends and industry averages utilizing the assistance of an actuary to determine the best estimate of theultimate expected loss. We believe such accruals to be adequate; however, insurance liabilities are difficult to assess and estimate due to unknown factors,including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents incurred but not reported and theeffectiveness of our safety program. Therefore, if actual experience differs from the assumptions used in the actuarial valuation, adjustments to the reserve may berequired and would be recorded in the period that the experience becomes known.Valuation Allowance for Deferred Tax Assets. We regularly evaluate valuation allowances established for deferred tax assets for which future realization isuncertain. We perform this evaluation quarterly. The estimation of required valuation allowances includes estimates of future taxable income. In assessing therealizability of deferred tax assets at September 30, 2019, we concluded, based upon the assessment of positive and negative evidence, that it is more likely thannot that the Company will generate sufficient table income within the applicable NOL carryforward periods to realize $40.9 million of its deferred tax assets. Weconsidered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.An inability to generate sufficient taxable income in future periods to realize our deferred tax assets may lead to a future need for a valuation allowance and acorresponding reduction in GAAP net income. In addition, any further reduction in the federal statutory tax rate in the future could also cause a reduction in theeconomic benefit of the NOL available to us and a corresponding charge to reduce the book value of the deferred tax asset recorded on our balance sheet.Income Taxes. GAAP specifies the methodology by which a company must identify, recognize, measure and disclose in its financial statements the effects of anyuncertain tax return reporting positions that it has taken or expects to take. GAAP requires financial statement reporting of the expected future tax consequences ofuncertain tax return reporting positions on the presumption that all relevant tax authorities possess full knowledge of those tax reporting positions, as well as all ofthe pertinent facts and circumstances, but it prohibits discounting of any of the related tax effects for the time value of money.The evaluation of a tax position is a two-step process. The first step is the recognition process to determine if it is more likely than not that a tax position will besustained upon examination by the appropriate taxing authority, based on the technical merits of the position. The second step is a measurement process whereby atax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit/expense to recognize in the financialstatements. The tax position is measured at the largest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement.The tax years ended September 30, 2017 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated inthose years.We anticipate that approximately $1.6 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.This reversal is predominantly due to the expiration of the statutes of limitation for unrecognized tax benefits.New Accounting Pronouncements. Recent accounting pronouncements are described in Note 2, “Summary of Significant Accounting Policies — New AccountingPronouncements” in the notes to our Consolidated Financial Statements and at relevant sections in this discussion and analysis. 36 Item 7A. Quantitative and Qualitative Disclosures About Market RiskManagement is actively involved in monitoring exposure to market risk and continues to develop and utilize appropriate risk management techniques. Ourexposure to significant market risks includes fluctuations in labor costs and commodity prices for copper, aluminum, steel and fuel. Commodity price risks mayhave an impact on our results of operations due to the fixed price nature of many of our contracts. We are also exposed to interest rate risk with respect to ouroutstanding debt obligations on the Credit Facility. For additional information see “Risk Factors” in Item 1A of this Annual Report on Form 10-K. Commodity RiskOur exposure to significant market risks includes fluctuations in commodity prices for copper, aluminum, steel and fuel. Commodity price risks may have animpact on our results of operations due to the fixed nature of many of our contracts. Over the long-term, we expect to be able to pass along a portion of these coststo our customers, as market conditions in the construction industry will allow.Interest Rate RiskWe are subject to interest rate risk on floating interest rate borrowings under our revolving credit facility. If LIBOR were to increase, our interest paymentobligations on outstanding borrowings would increase, having a negative effect on our cash flow and financial condition. As we have no borrowings outstanding atSeptember 30, 2019, we had no exposure to interest rate risk as of that date. We currently do not maintain any hedging contracts that would limit our exposure tovariable rates of interest when we have outstanding borrowings. Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changesin market interest rates. 37 Item 8. Financial Statements and Supplementary DataINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReports of Independent Registered Public Accounting Firm39Consolidated Balance Sheets41Consolidated Statements of Comprehensive Income (Loss)42Consolidated Statements of Stockholders' Equity43Consolidated Statements of Cash Flows44Notes to Consolidated Financial Statements4538 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of IES Holdings, Inc. and subsidiariesOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of IES Holdings, Inc. and subsidiaries (the Company) as of September 30, 2019 and 2018, therelated consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended September 30,2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,in all material respects, the financial position of the Company at September 30, 2019 and 2018, and the results of its operations and its cash flows for each of thethree years in the period ended September 30, 2019, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internalcontrol over financial reporting as of September 30, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 6, 2019 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statementsbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion.s/ ERNST & YOUNG LLPWe have served as the Company’s auditor since 2002Houston, TexasDecember 6, 201939 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of IES Holdings, Inc. and subsidiariesOpinion on Internal Control Over Financial ReportingWe have audited IES Holdings Inc. and subsidiaries’ internal control over financial reporting as of September 30, 2019, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In ouropinion, IES Holdings, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September30, 2019, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balancesheets of the Company as of September 30, 2019 and 2018, the related consolidated statements of comprehensive income (loss), stockholders’ equity and cashflows for each of the three years in the period ended September 30, 2019, and the related notes, and our report dated December 6, 2019 expressed an unqualifiedopinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to expressan opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.s/ ERNST & YOUNG LLPHouston, TexasDecember 6, 201940 IES HOLDINGS, INC. AND SUBSIDIARIESConsolidated Balance Sheets(In Thousands, Except Share Information) September 30, 2019 2018ASSETS CURRENT ASSETS: Cash and cash equivalents$18,934 $26,247 Accounts receivable: Trade, net of allowance186,279 151,578 Retainage29,214 24,312 Inventories21,543 20,966 Costs and estimated earnings in excess of billings29,860 31,446 Prepaid expenses and other current assets10,625 8,144 Total current assets296,455 262,693 Property and equipment, net25,746 25,364 Goodwill50,622 50,702 Intangible assets, net26,623 30,590 Deferred tax assets40,874 46,580 Other non-current assets4,938 6,065Total assets$445,258 $421,994LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses152,909 130,591 Billings in excess of costs and estimated earnings40,563 33,826 Total current liabilities193,472 164,417 Long-term debt299 29,564 Other non-current liabilities1,945 4,374Total liabilities195,716 198,355Noncontrolling interest3,294 3,232 STOCKHOLDERS’ EQUITY: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued and outstanding— — Common stock, $0.01 par value, 100,000,000 shares authorized; 22,049,529 issued and 21,165,011 and 21,205,536 outstanding, respectively220 220 Treasury stock, at cost, 884,518 and 843,993 shares, respectively(12,483) (8,937) Additional paid-in capital192,911 196,810 Retained earnings65,600 32,314Total stockholders’ equity246,248 220,407Total liabilities and stockholders’ equity$445,258 $421,994The accompanying notes are an integral part of these Consolidated Financial Statements.41 IES HOLDINGS, INC. AND SUBSIDIARIESConsolidated Statements of Comprehensive Income (Loss)(In Thousands, Except Share Information) Year Ended September 30, 2019 2018 2017Revenues$1,076,996 $876,828 $810,744Cost of services894,893 726,866 670,246 Gross profit182,103 149,962 140,498Selling, general and administrative expenses140,575 123,920 120,370Contingent consideration(374) 103 (145)Loss (gain) on sale of assets52 (15) (69) Operating income41,850 25,954 20,342Interest and other (income) expense: Interest expense1,857 1,946 1,702Other (income) expense, net(148) (340) (165)Income from operations before income taxes40,141 24,348 18,805Provision (benefit) for income taxes6,663 38,151 5,211Net income (loss)33,478 (13,803) 13,594Net income attributable to noncontrolling interest(272) (354) (172)Comprehensive income (loss) attributable to IES Holdings, Inc.$33,206 $(14,157) $13,422 Earnings (loss) per share attributable to IES Holdings, Inc.: Basic$1.56 $(0.67) $0.62 Diluted$1.55 $(0.67) $0.62 Shares used in the computation of earnings (loss) per share: Basic21,082,012 21,196,388 21,280,549 Diluted21,315,245 21,196,388 21,533,254The accompanying notes are an integral part of these Consolidated Financial Statements.42 IES HOLDINGS, INC. AND SUBSIDIARIESConsolidated Statements of Stockholders’ Equity(In Thousands, Except Share Information) Common Stock Treasury Stock RetainedEarnings TotalStockholders'Equity Shares Amount Shares Amount APIC BALANCE, September 30, 201622,049,529 $220 (592,990) $(4,781) $195,221 $32,745 $223,405 Grants under compensation plans— — 1,803 15 (15) — — Cumulative effect adjustment from adoption of ASU2016-09— — — — 59 304 363 Acquisition of treasury stock— — (152,860) (2,367) — — (2,367) Stock forfeitures— — (2,257) (40) 40 — — Options exercised— — 33,750 275 (57) — 218 Non-cash compensation— — — — 1,707 — 1,707 Increase in noncontrolling interest— — — — — (44) (44) Net income attributable to IES Holdings, Inc.— — — — — 13,422 13,422BALANCE, September 30, 201722,049,529 $220 (712,554) $(6,898) $196,955 $46,427 $236,704 Grants under compensation plans— — 520 5 (5) — — Acquisition of treasury stock— — (133,459) (2,059) — — (2,059) Options exercised— — 1,500 15 (4) — 11 Non-cash compensation— — — — (136) — (136) Decrease in noncontrolling interest— — — — — 44 44 Net loss attributable to IES Holdings, Inc.— — — — — (14,157) (14,157)BALANCE, September 30, 201822,049,529 $220 (843,993) $(8,937) $196,810 $32,314 $220,407 Issuance of restricted stock & performance stock— — 501,797 5,942 (5,942) — — Options exercised— — 22,500 314 (314) — — Cumulative effect adjustment from adoption of newaccounting standard— — — — — 80 80 Acquisition of treasury stock— — (564,822) (9,802) — — (9,802) Non-cash compensation— — — — 2,357 — 2,357 Net income attributable to IES Holdings, Inc.— — — — — 33,206 33,206BALANCE, September 30, 201922,049,529 $220 (884,518) $(12,483) $192,911 $65,600 $246,248The accompanying notes are an integral part of these Consolidated Financial Statements.43 IES HOLDINGS, INC. AND SUBSIDIARIESConsolidated Statements of Cash Flows(In Thousands) Year Ended September 30, 2019 2018 2017CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)$33,478 $(13,803) $13,594Adjustments to reconcile net income (loss) to net cash provided by operating activities: Bad debt expense552 421 296Deferred financing cost amortization318 288 294Depreciation and amortization9,557 8,860 9,634Loss (gain) on sale of assets52 (15) (69)Non-cash compensation expense2,357 (136) 1,707Deferred income taxes5,681 38,151 6,899Changes in operating assets and liabilities Accounts receivable(35,254) (7,574) (7,621)Inventories(684) (3,970) (1,856)Costs and estimated earnings in excess of billings1,586 (17,840) 2,571Prepaid expenses and other current assets(7,171) (2,250) (6,798)Other non-current assets(444) 274 (510)Accounts payable and accrued expenses22,472 6,584 (2,829)Billings in excess of costs and estimated earnings6,683 3,570 5,898Other non-current liabilities(459) (336) 1,139Net cash provided by operating activities38,724 12,224 22,349CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment(6,300) (4,563) (4,589)Proceeds from sales of assets502 108 270Cash received (paid) in conjunction with business combinations or dispositions50 (7,406) (20,213)Net cash used in investing activities(5,748) (11,861) (24,532)CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings of debt89,261 168 5,434Repayments of debt(119,508) (177) (5,432)Contingent consideration payment— — (448)Distribution to noncontrolling interest(240) (349) (153)Purchase of treasury stock(9,802) (2,059) (2,367)Issuance of shares— 11 218Net cash provided by (used in) financing activities(40,289) (2,406) (2,748)NET DECREASE IN CASH AND CASH EQUIVALENTS(7,313) (2,043) (4,931)CASH, CASH EQUIVALENTS, beginning of period26,247 28,290 33,221CASH, CASH EQUIVALENTS, end of period$18,934 $26,247 $28,290 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest$1,743 $1,684 $1,521Cash paid for income taxes (net)$1,370 $2,839 $2,429The accompanying notes are an integral part of these Consolidated Financial Statements.44 IES HOLDINGS, INC.Notes to the Consolidated Financial Statements(All Amounts in Thousands Except Share Amounts)1. BUSINESSDescription of the BusinessIES Holdings, Inc. is a holding company that owns and manages operating subsidiaries in business activities across a variety of end-markets. Our operations arecurrently organized into four principal business segments, based upon the nature of our current services:•Commercial & Industrial – Provider of electrical and mechanical design, construction, and maintenance services to the commercial and industrial marketsin various regional markets and nationwide in certain areas of expertise, such as the power infrastructure market.•Communications – Nationwide provider of technology infrastructure services, including the design, build, and maintenance of the communicationsinfrastructure within data centers for colocation and managed hosting customers for both large corporations and independent businesses.•Infrastructure Solutions – Provider of electro-mechanical solutions for industrial operations, including apparatus repair and custom-engineered productssuch as generator enclosures to be used in data centers and other industrial applications.•Residential – Regional provider of electrical installation services for single-family housing and multi-family apartmentcomplexes.The words “IES”, the “Company”, “we”, “our”, and “us” refer to IES Holdings, Inc. and, except as otherwise specified herein, to our consolidated subsidiaries.Controlling ShareholderAs of September 30, 2019, Tontine Associates, L.L.C., together with its affiliates (collectively, “Tontine”), is the controlling shareholder of the Company’scommon stock. Accordingly, Tontine has the ability to exercise significant control over our affairs, including the election of directors and most actions requiringthe approval of shareholders, including the approval of any potential merger or sale of all or substantially all assets or segments of the Company, or the Companyitself. For a more complete discussion on our relationship with Tontine, please refer to Note 3, “Controlling Shareholder” in the notes to our ConsolidatedFinancial Statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of ConsolidationThe accompanying Consolidated Financial Statements include the accounts of IES Holdings, Inc. and its consolidated subsidiaries. All significant intercompanyaccounts and transactions have been eliminated in consolidation.Asset ImpairmentDuring the fiscal years ended September 30, 2019, 2018 and 2017, the Company recorded no asset impairment charges.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use ofestimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosures of contingent liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates areprimarily used in our revenue recognition of construction in progress, fair value assumptions in accounting for business combinations and analyzing goodwill,investments, intangible assets and long-lived asset impairments and adjustments, allowance for doubtful accounts receivable, stock-based compensation, reservesfor legal matters, realizability of deferred tax assets, unrecognized tax benefits and self-insured claims liabilities and related reserves.Cash and Cash EquivalentsWe consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.45 InventoriesInventories consist of raw materials, work in process, finished goods, and parts and supplies held for use in the ordinary course of business. Inventory is valued atthe lower of cost or net realizable value generally using the historical average cost or first-in, first-out (FIFO) method. When circumstances dictate, we write downinventory to its estimated net realizable value based on assumptions about future demand, market conditions, plans for disposal, and physical condition of theproduct. Where shipping and handling costs on inventory purchases are borne by us, these charges are included in inventory and charged to cost of services uponuse in our projects or the providing of services.Securities and Equity InvestmentsOur investments in entities where we do not have the ability to exercise significant influence are accounted for using the cost method of accounting. Each period,we evaluate whether an event or change in circumstances has occurred that may indicate an investment has been impaired. If, upon further investigation of suchevents, we determine the investment has suffered a decline in value that is other than temporary, we write down the investment to its estimated fair value.Property and EquipmentAdditions of property and equipment are recorded at cost, and depreciation is computed using the straight-line method over the estimated useful life of the relatedasset. Leasehold improvements are capitalized and depreciated over the lesser of the 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 ofexisting property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the capitalized cost and relatedaccumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the statements of comprehensive income in the caption(gain) loss on sale of assets.GoodwillGoodwill attributable to each reporting unit is tested for impairment either by comparing the fair value of each reporting unit with its carrying value or by aqualitative assessment. These impairment tests are required to be performed at least annually. On an ongoing basis (absent any impairment indicators), we performan impairment test annually using a measurement date of September 30. In evaluating goodwill for impairment, we have the option to first assess qualitative factorsto determine whether it is more likely than not that the fair value of a reporting unit is greater than its carrying value. If we determine that it is more likely than notthat the carrying value of a reporting unit is greater than its fair value, then we perform an impairment test by calculating the fair value of the reporting unit andcomparing this calculated fair value with the carrying value of the reporting unit.We estimate the fair value of the reporting unit based on both a market approach and an income approach, using discounted estimated future cash flows. Themarket approach uses market multiples of enterprise value to earnings before interest, taxes, depreciation and amortization for comparable publicly tradedcompanies. The income approach relies on significant estimates for future cash flows, projected long-term growth rates, and the weighted average cost of capital.Intangible AssetsIntangible assets with definite lives are amortized over their estimated useful lives based on expected economic benefit with no residual value.Debt Issuance CostsDebt issuance costs are included as a reduction of our debt outstanding, or alternately classified within other non-current assets if we have no borrowings drawn onour credit facility at the balance sheet date, and are amortized to interest expense over the scheduled maturity of the debt. Amortization expense of debt issuancecosts was $318, $288 and $294, respectively, for the years ended 2019, 2018 and 2017. Remaining unamortized capitalized debt issuance costs were $782 and$912 at September 30, 2019, and 2018, respectively.Revenue RecognitionRevenue is generally recognized from a contract with a customer when: (i) it has approval and commitment from both parties, (ii) the rights of the parties areidentified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. We consider the start ofa project to be when the above criteria have been met and we have written authorization from the customer to proceed.We recognize revenue on project contracts using the percentage of completion method. Project contracts generally provide that customers accept completion ofprogress to date and compensate us for services rendered measured in terms of units installed, hours expended or46 some other measure of progress. We recognize revenue on both signed contracts and change orders. A discussion of our treatment of claims and unapprovedchange orders is described later in this section. Percentage of completion for construction contracts is measured principally by the percentage of costs incurred andaccrued to date for each contract to the estimated total cost for each contract at completion. We generally consider contracts to be substantially complete upondeparture from the work site and acceptance by the customer. Contract costs include all direct material, labor and insurance costs and those indirect costs related tocontract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Changes in job performance, job conditions, estimated contract costsand profitability and final contract settlements can result in change orders under which the customer agrees to pay additional contract price. Revisions can alsoresult in claims we might make against the customer to recover additional costs that have not been resolved through change orders with the customer. Except incertain circumstances, we do not recognize revenue or margin based on change orders or claims until they have been agreed upon with the customer. The amountof revenue associated with unapproved change orders and claims was immaterial for the years ended September 30, 2019, 2018 and 2017. Provisions for totalestimated losses on uncompleted contracts are made in the period in which such losses are determined. The balances billed but not paid by customers pursuant toretainage provisions in project contracts are typically due upon completion of the contracts and acceptance by the customer. Based on our experience, the retentionbalance at each balance sheet date will be collected within the subsequent fiscal year.Certain divisions in the Residential and Infrastructure Solutions segments use the completed contract method of accounting because the duration of their contractsis short in nature. We recognize revenue on completed contracts when the project is complete and billable to the customer. Provisions for estimated losses on thesecontracts are recorded in the period such losses are determined.Accounts Receivable and Allowance for Doubtful AccountsWe record accounts receivable for all amounts billed and not collected. Generally, we do not charge interest on outstanding accounts receivable; however, fromtime to time we may believe it necessary to charge interest on a case by case basis. Additionally, we provide an allowance for doubtful accounts for specificaccounts receivable where collection is considered doubtful as well as for general unknown collection issues based on historical trends. Accounts receivable notdetermined to be collectible are written off as deemed necessary in the period such determination is made. As is common in our industry, some of these receivablesare in litigation or require us to exercise our contractual lien rights in order to collect. Our allowance for doubtful accounts at September 30, 2019 and 2018 was$1,184 and $868, respectively. We believe that our allowance for doubtful accounts is sufficient to cover uncollectible receivables as of September 30, 2019.Comprehensive Income (Loss)Comprehensive income (loss) includes all changes in equity during a period except those resulting from investments by and distributions to stockholders.Income TaxesWe follow the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recorded for the futureincome tax consequences of temporary differences between the financial reporting and income tax bases of assets and liabilities, and are measured using enactedtax rates and laws. We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. We perform this evaluation on a quarterlybasis. The estimation of required valuation allowances includes estimates of future taxable income. In assessing the realizability of deferred tax assets atSeptember 30, 2019, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generatesufficient taxable income within the applicable NOL carryforward periods to realize its net deferred tax assets of $40,874. We considered the scheduled reversal ofdeferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. If actual future taxable income is different fromthese estimates, our results could be affected.Risk ManagementWe retain the risk for workers’ compensation, employer’s liability, automobile liability, construction defects, general liability and employee group health claims,as well as pollution coverage, resulting from uninsured deductibles per accident or occurrence which are generally subject to annual aggregate limits. Our generalliability program provides coverage for bodily injury and property damage. In many cases, we insure third parties, including general contractors, as additionalinsureds under our insurance policies. Losses are accrued based upon our known claims incurred and an estimate of claims incurred but not reported. Each year,we compile our historical data pertaining to the insurance experiences and actuarially develop the ultimate loss associated with our insurance programs other thanpollution coverage for our Infrastructure Solutions segment. We believe that the actuarial valuation provides the best estimate of the ultimate losses to be expectedunder these programs.47 The undiscounted ultimate losses of our workers’ compensation, auto and general liability insurance reserves at September 30, 2019, and 2018, was $4,975 and$5,286, respectively. Based on historical payment patterns, we expect payments of undiscounted ultimate losses to be made as follows:Year Ended September 30: 2020 $1,422 2021 1,065 2022 727 2023 504 2024 290 Thereafter 967Total $4,975We elect to discount the ultimate losses above to present value using an approximate risk-free rate over the average life of our insurance claims. For the yearsended September 30, 2019 and 2018, the discount rate used was 1.6 percent and 2.9 percent, respectively. The present value of all insurance reserves for theemployee group health claims, workers’ compensation, auto and general liability recorded at September 30, 2019, and 2018 was $6,683 and $6,202, respectively.Our employee group health claims are anticipated to be resolved within the year ended September 30, 2020.We had letters of credit totaling $6,268 outstanding at September 30, 2019 to collateralize certain of our high deductible insurance obligations.Realization of Long-Lived AssetsWe evaluate the recoverability of property and equipment and other long-lived assets as facts and circumstances indicate that any of those assets might beimpaired. If an evaluation is required for our assets we plan to hold and use, the estimated future undiscounted cash flows associated with the asset are compared tothe asset’s carrying amount to determine if an impairment of such property has occurred. The effect of any impairment would be to expense the difference betweenthe fair value of such property and its carrying value. Estimated fair values are determined based on expected future cash flows discounted at a rate we believeincorporates the time value of money, the expectations about future cash flows and an appropriate risk premium.For the years ended September 30, 2019, 2018 and 2017, no indicators of impairments were identified, and no impairment charges were recorded.Risk ConcentrationFinancial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash deposits and accounts receivable. Through delayedpayment terms, we at times grant credit, usually without collateral, to our customers, who are generally large public companies, contractors and homebuildersthroughout the United States. Consequently, we are subject to potential credit risk related to changes in business and economic factors throughout the UnitedStates, specifically, within the construction, homebuilding and mission critical facility markets. However, we are entitled to payment for work performed andgenerally have certain lien rights in that work. Further, management believes that its contract acceptance, billing and collection policies are adequate to managepotential credit risk. We routinely maintain cash balances in financial institutions in excess of federally insured limits. We periodically assess the financialcondition of these institutions where these funds are held and believe the credit risk is minimal. We maintain the majority of our cash and cash equivalents inmoney market mutual funds. There can be no assurance, however, that we will not be adversely affected by credit risks we face. No single customer accounted for more than 10% of our consolidated revenues for the years ended September 30, 2019, 2018 and 2017.Fair Value of Financial InstrumentsOur financial instruments consist of cash and cash equivalents, accounts receivable, investments, accounts payable, and a loan agreement. We believe that thecarrying value of financial instruments approximates their fair value due to their short-term nature. The carrying value of our debt approximates fair value, as debtincurs interest at a variable rate.Stock-Based CompensationWe measure and record compensation expense for all share-based payment awards based on the fair value of the awards granted at the date of grant. The fair valueof restricted stock awards and phantom stock unit awards is determined based on the number of shares granted and the closing price of IES’s common stock on thedate of grant. For awards vesting upon achievement of a market condition, the likelihood of achieving that market condition is considered in determining the fairvalue of the grant, which we expense ratably over the48 vesting period. For awards vesting upon achievement of a performance condition, we record expense based on the grant date fair value when it becomes probablethe performance condition will be achieved. Forfeitures are recorded in the period in which they occur. The resulting compensation expense is recognized on astraight-line basis over the requisite service period, which is generally the vesting period.Deferred Compensation PlansThe Company maintains a rabbi trust to fund certain deferred compensation plans. The securities held by the trust are classified as trading securities. Theinvestments are recorded at fair value and are classified as other non-current assets in the accompanying Consolidated Balance Sheets as of September 30, 2019,and 2018. The changes in fair values are recorded as a component of other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). The corresponding deferred compensation liability is included in other non-current liabilities on the Consolidated Balance Sheets and changes in this obligation arerecognized as adjustments to compensation expense in the period in which they are determined.Noncontrolling InterestIn connection with our acquisitions of STR Mechanical, LLC (“STR Mechanical”) in fiscal 2016 and NEXT Electric, LLC (“NEXT Electric”) in fiscal 2017, weacquired 80 percent interests in these entities, and the remaining 20 percent was retained by the third party sellers. The interests retained by those third party sellersare identified on our Consolidated Balance Sheets as noncontrolling interest, classified outside of permanent equity. Under the terms of the operating agreementsgoverning these entities, after five years from the dates of the acquisitions, we may elect to purchase, or the third party sellers may require us to purchase, part ofall of the remaining 20 percent interests in these entities. The purchase price is variable, based on a multiple of earnings as defined in the operating agreements.Therefore, this noncontrolling interest is carried at the greater of the balance determined under ASC 810 and the redemption amounts assuming the noncontrollinginterests were redeemable at the balance sheet date. If all of these interests had been redeemable at September 30, 2019, the redemption amount would have been$3,294. For the year ended September 30, 2018, we recorded an increase to retained earnings of $44 to offset an increase to noncontrolling interest recorded infiscal 2017, decreasing the carrying amount of the noncontrolling interest in STR to the balance determined under ASC 810, as if it had been redeemable atSeptember 30, 2018, as the redemption amount would have been less than the carrying amount.Accounting Standards Not Yet AdoptedIn February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update No. 2016-02, Leases (“ASU 2016-02”). UnderASU 2016-02, we will recognize a right-of-use asset and a lease liability on our Balance Sheet for all leases, other than those that meet the definition of a short-term lease. For income statement purposes, leases must be classified as either operating or finance. Operating leases will result in straight-line expense, similar tocurrent operating leases, while finance leases will be accounted for similar to current capital leases. We plan to adopt this standard on October 1, 2019, using amodified retrospective transition approach. We plan to utilize the optional transition method allowed under Accounting Standard Update No. 2018-11, whichallows the recognition of a cumulative-effect adjustment to retained earnings on such date and the continued reporting of retrospective periods using the previousaccounting standards. We plan to elect all of the available practical expedients, which would allow the use of hindsight in the determination of the lease term andimpairment assessment of the right-of-use assets, and eliminate the need to reassess whether our existing or expired contracts contain a lease and its correspondingclassification. We have developed processes and internal controls to meet the reporting and disclosure requirements of the standard, including the validation anddetailed assessment of our full lease population. Our balance sheet will be impacted from this standard by recording lease right-of-use assets and lease liabilities insimilar amounts, which we currently estimate to be less than $35 million as of October 1, 2019, with any difference between the right-of-use asset and the leaseliabilities recorded to previously accrued or deferred rent expense relating to prior periods. We do not anticipate that the standard will have a significant impact onour net earnings, cash flows or compliance with the financial covenants under our revolving credit facility.In June 2016, the FASB issued Accounting Standard Update No. 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”), which requires companies toconsider historical experiences, current market conditions and reasonable and supportable forecasts in the measurement of expected credit losses, with furtherclarifications made in April 2019 and May 2019 with the issuances of Accounting Standard Updates No. 2019-04 and 2019-05. This update is effective for fiscalyears beginning after December 15, 2019 and for interim periods within those fiscal years, although early adoption is permitted. We are currently evaluating theimpact it will have on our Consolidated Financial Statements. We plan to adopt this standard on October 1, 2020.In June 2018, the FASB issued Accounting Standard Update No. 2018-07, Compensation—Stock Compensation (“ASU 2018-07”), to simplify the accounting forshare-based payments to nonemployees by aligning it with the accounting for share-based payments for employees, with certain exceptions. Under the newguidance, the cost for nonemployee awards may be lower and less volatile than under current GAAP because the measurement generally will occur earlier and willbe fixed at the grant date. This update is effective for the fiscal year ended September 30, 2020.49 In August 2018, the FASB issued Accounting Standard Update No. 2018-13, Fair Value Measurement Disclosure Framework (“ASU 2018-13”), to modify certaindisclosure requirements for fair value measurements. Under the new guidance, registrants will need to disclose weighted average information for significantunobservable inputs for all Level 3 fair value measurements. The guidance does not specify how entities should calculate the weighted average, but requires themto explain their calculation. The new guidance also requires disclosing the changes in unrealized gains and losses for the period included in other comprehensiveincome for recurring Level 3 fair value measurements of instruments held at the end of the reporting period. This guidance is effective for fiscal years beginningafter December 15, 2019 and for interim periods within those fiscal years, although early adoption is permitted for either the entire standard or only the provisionsthat eliminate or modify the requirements.We do not expect ASU 2018-07 or ASU 2018-13 to have a material effect on our Consolidated Financial Statements and we plan to adopt these standards onOctober 1, 2019 and October 1, 2020, respectively.Accounting Standards Recently AdoptedIn May 2014, the FASB issued Accounting Standard Update No. 2014-09, which provides a single comprehensive accounting standard for revenue recognition forcontracts with customers and supersedes prior industry-specific guidance. The new standard requires companies to recognize revenue when control of promisedgoods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled. The new model requirescompanies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time for each obligation.The new standard also expands disclosure requirements regarding revenue and cash flows arising from contracts with customers.We adopted the new revenue recognition standard on October 1, 2018 (“Adoption Date”), using the modified retrospective method, which provides for acumulative effect adjustment to beginning fiscal 2019 retained earnings for uncompleted contracts impacted by the adoption. We recorded an adjustment of $80 tobeginning fiscal 2019 retained earnings as a result of adoption of the new standard. The changes to the method and/or timing of our revenue recognition associatedwith the new standard primarily affect revenue recognition within our Infrastructure Solutions segment for which, as of October 1, 2018, certain of our contracts donot qualify for revenue recognition over time. In addition, we have now combined in process contracts that historically had been accounted for as separatecontracts in cases where those contracts meet the criteria for combination of contracts under the new standard, and we now capitalize certain commissions whichwere previously expensed when incurred. The impact on our results for the year ended September 30, 2019, of applying the new standard to our contracts was notmaterial.Consistent with our adoption method, the comparative prior period information continues to be reported using the previous accounting standards in effect for theperiod presented. We have elected to utilize the modified retrospective transition practical expedient that allows us to evaluate the impact of contract modificationsas of the Adoption Date rather than evaluating the impact of the modifications at the time they occurred prior to the Adoption Date.See Note 4, “Revenue Recognition” for additional discussion of our revenue recognition accounting policies and expanded disclosures.In January 2016, the FASB issued Accounting Standard Update No. 2016‑01, Financial Instruments. This standard is associated with the recognition andmeasurement of financial assets and liabilities, with further clarifications made in February 2018 with the issuance of Accounting Standard Update No. 2018-03.The amended guidance requires certain equity investments that are not consolidated and not accounted for under the equity method to be measured at fair valuewith changes in fair value recognized in net income rather than as a component of accumulated other comprehensive income (loss). It further states that an entitymay choose to measure equity investments that do not have readily determinable fair values using a quantitative approach, or measurement alternative, which isequal to its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similarinvestment of the same issuer. Our adoption of this standard on October 1, 2018 had no impact on our Consolidated Financial Statements.In January 2017, the FASB issued Accounting Standard Update No. 2017-01, Business Combinations. This standard clarifies the definition of a business to assistentities with evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Our adoption of this standard onOctober 1, 2018 using the prospective transition method had no impact on our Condensed Consolidated Financial Statements.In May 2017, the FASB issued Accounting Standard Update No. 2017-09, Compensation—Stock Compensation, to reduce the diversity in practice and the costand complexity when changing the terms or conditions of a share-based payment award. Our adoption of this standard on October 1, 2018 using the prospectivetransition method had no impact on our Consolidated Financial Statements.50 3. CONTROLLING SHAREHOLDERTontine is the Company's controlling shareholder, owning approximately 58 percent of the Company’s outstanding common stock according to a Form 4 filed withthe SEC by Tontine on October 3, 2019. Accordingly, Tontine has the ability to exercise significant control over our affairs, including the election of directors andmost actions requiring the approval of shareholders.While Tontine is subject to certain restrictions under federal securities laws on sales of its shares as an affiliate, the Company has filed a shelf registrationstatement to register all of the shares of IES common stock owned by Tontine at the time of registration. As long as the shelf registration statement remainseffective and the Company remains eligible to use it, Tontine has the ability to resell any or all of its registered shares from time to time in one or more offerings, asdescribed in the shelf registration statement and in any prospectus supplement filed in connection with an offering pursuant to the shelf registration statement.Should Tontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership of IES could occur. A change in ownership, as defined byInternal Revenue Code Section 382, could reduce the availability of the Company’s net operating losses (“NOLs”) for federal and state income tax purposes. OnNovember 8, 2016, the Company implemented a tax benefit protection plan (the “NOL Rights Plan”). The NOL Rights Plan was designed to deter an acquisition ofthe Company's stock in excess of a threshold amount that could trigger a change in ownership within the meaning of Internal Revenue Code Section 382. Therecan be no assurance that the NOL Rights Plan will be effective in deterring a change in ownership or protecting the NOLs. Furthermore, a change of control wouldtrigger the change of control provisions in a number of our material agreements, including our credit facility, bonding agreements with our sureties and ourexecutive severance plan.Jeffrey L. Gendell was appointed as a member of the Board of Directors and as Chairman of the Board in November 2016. He is the managing member andfounder of Tontine, and the brother of David B. Gendell, who has served as a member of our Board of Directors since February 2012, and who previously servedas Interim Director of Operations from November 2017 to January 2019, as Vice Chairman of the Board from November 2016 to November 2017 and as Chairmanof the Board from January 2015 to November 2016. David B. Gendell was an employee of Tontine from 2004 until December 31, 2017.The Company is party to a sublease agreement with Tontine Associates for corporate office space in Greenwich, Connecticut. The sublease extends throughFebruary 27, 2023, with monthly payments due in the amount of approximately $8. Payments by the Company are at a rate consistent with that paid by TontineAssociates to its landlord.On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates, in order to assistTontine in managing its investment in the Company. Subject to the terms and conditions set forth in the Observer Agreement, the Company granted Tontine theright, at any time that Tontine holds at least 20% of the outstanding common stock of the Company, to appoint a representative to serve as an observer to the Board(the “Board Observer”). The Board Observer, who must be reasonably acceptable to those members of the Board who are not affiliates of Tontine, shall have novoting rights or other decision making authority. Subject to the terms and conditions set forth in the Observer Agreement, so long as Tontine has the right toappoint a Board Observer, the Board Observer will have the right to attend and participate in meetings of the Board and the committees thereof, subject toconfidentiality requirements, and to receive reimbursement for reasonable out-of-pocket expenses incurred in his or her capacity as a Board Observer and suchrights to coverage under the Company’s directors’ and officers’ liability insurance policy as are available to the Company’s directors.4. REVENUE RECOGNITIONContractsOur revenue is derived from contracts with customers, and we determine the appropriate accounting treatment for each contract at its inception. Our contractsprimarily relate to electrical and mechanical contracting services, technology infrastructure products and services, and electro-mechanical solutions for industrialoperations. Revenue is earned based upon an agreed fixed price or actual costs incurred plus an agreed upon percentage.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 havebeen met and we have written authorization from the customer to proceed.Performance ObligationsA performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinctperformance obligation and recognized as revenue when, or as, the performance obligation is satisfied.51 We recognize revenue over time for the majority of the services we perform as (i) control continuously transfers to the customer as work progresses at a projectlocation controlled by the customer and (ii) we have the right to bill the customer as costs are incurred. Within our Infrastructure Solutions segment, we oftenperform work inside our own facilities, where control does not continuously transfer to the customer as work progresses. In such cases, we evaluate whether wehave the right to bill the customer as costs are incurred. Such assessment involves an evaluation of contractual termination clauses. Where we have a contractualright to payment for work performed to date, we recognize revenue over time. If we do not have such a right, we recognize revenue upon completion of thecontract, when control of the work transfers to the customer.For fixed price arrangements, we use the percentage of completion method of accounting under which revenue recognized is measured principally by the costsincurred and accrued to date for each contract as a percentage of the estimated total cost for each contract at completion. Contract costs include all direct material,labor and indirect costs related to contract performance. Changes in job performance, job conditions, estimated contract costs and profitability and final contractsettlements may result in revisions to costs and income, and the effects of these revisions are recognized in the period in which the revisions are determined.Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. This measurement and comparison processrequires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments. Variable ConsiderationThe transaction price for our contracts may include variable consideration, which includes changes to transaction price for approved and unapproved changeorders, claims and incentives. Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration serviceprovided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. We estimate variableconsideration for a performance obligation at the probability weighted value we expect to receive (or the most probable amount we expect to incur in the case ofliquidated damages, if any), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the caseof liquidated damages, if any). We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal ofcumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Our estimates of variableconsideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of our anticipated performanceand all information (historical, current and forecasted) that is reasonably available to us. The effect of variable consideration on the transaction price of aperformance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders and claims reflected intransaction price (or accounted for as a reduction of the transaction price in the case of liquidated damages) are not resolved in our favor, or to the extent incentivesreflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue.Costs of Obtaining a ContractIn certain of our operations, we incur commission costs related to entering into a contract that we only incurred because of that contract. When this occurs, wecapitalize that cost and amortize it over the expected term of the contract. At September 30, 2019, we had capitalized commission costs of $86. We generally do not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project. When significant pre‑contract costsare incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract.Disaggregation of RevenueWe disaggregate our revenue from contracts with customers by activity and contract type, as these categories reflect how the nature, amount, timing anduncertainty of our revenue and cash flows are affected by economic factors. Our consolidated 2019, 2018, and 2017 revenue was derived from the followingservice activities. See details in the following tables:52 Year Ended September 30, 2019 2018 2017Commercial & Industrial$305,624 $274,299 $227,606Communications321,246 219,655 225,275Infrastructure Solutions Industrial Services48,948 44,701 46,079Custom Power Solutions87,842 52,462 37,745Total Infrastructure Solutions136,790 97,163 83,824Residential Single-family212,358 190,379 162,100Multi-family and Other100,978 95,332 111,939Total Residential313,336 285,711 274,039Total Revenue$1,076,996 $876,828 $810,744 Year Ended September 30, 2019 Commercial &Industrial Communications InfrastructureSolutions Residential TotalFixed-price $286,319 $229,143 $129,096 $313,336 $957,894Time-and-material 19,305 92,103 7,694 — 119,102Total revenue $305,624 $321,246 $136,790 $313,336 $1,076,996 Year Ended September 30, 2018 Commercial &Industrial Communications InfrastructureSolutions Residential TotalFixed-price $244,464 $166,258 $90,155 $285,711 $786,588Time-and-material 29,835 53,397 7,008 — 90,240Total revenue $274,299 $219,655 $97,163 $285,711 $876,828 Year Ended September 30, 2017 Commercial &Industrial Communications InfrastructureSolutions Residential TotalFixed-price $206,850 $174,922 $76,232 $274,039 $732,043Time-and-material 20,756 50,353 7,592 — 78,701Total revenue $227,606 $225,275 $83,824 $274,039 $810,74453 Accounts ReceivableAccounts receivable include amounts which we have billed or have an unconditional right to bill our customers. As of September 30, 2019, Accounts receivableincluded $11,329 of unbilled receivables for which we have an unconditional right to bill.Contract Assets and LiabilitiesProject contracts typically provide for a schedule of billings on percentage of completion of specific tasks inherent in the fulfillment of our performanceobligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized inthe statement of operations can and usually does differ from amounts that can be billed to the customer at any point during the contract. Amounts by whichcumulative contract revenue recognized on a contract as of a given date exceeds cumulative billings and unbilled receivables to the customer under the contract arereflected 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 thecustomer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as a current liability in our balance sheet under thecaption “Billings in excess of costs and estimated earnings”.The net asset (liability) position for contracts in process consisted of the following: September 30, 2019 2018Costs and estimated earnings on uncompleted contracts $761,401 $539,226Less: Billings to date and unbilled accounts receivable (772,104) (541,606) $(10,703) $(2,380)The net asset (liability) position for contracts in process included in the accompanying consolidated balance sheets was as follows: September 30, 2019 2018Costs and estimated earnings in excess of billings $29,860 $31,446Billings in excess of costs and estimated earnings (40,563) (33,826) $(10,703) $(2,380)During the year ended September 30, 2019, and 2018, we recognized revenue of $31,831 and $31,135 related to our contract liabilities at October 1, 2018 and2017, respectively. We did not have any impairment losses recognized on our receivables or contract assets for the years ended September 30, 2019, 2018, or 2017.Remaining Performance ObligationsRemaining performance obligations represent the unrecognized revenue value of our contract commitments. New awards represent the total expected revenue valueof new contract commitments undertaken during a given period, as well as additions to the scope of existing contract commitments. Our new performanceobligations vary significantly each reporting period based on the timing of our major new contract commitments. At September 30, 2019, we had remainingperformance obligations of $451,884. The Company expects to recognize revenue on approximately $391,769 of the remaining performance obligations over thenext 12 months, with the remaining recognized thereafter. For the year ended September 30, 2019, net revenue recognized from our performance obligations satisfied in previous periods was not material.5. PROPERTY AND EQUIPMENTProperty and equipment consists of the following:54 EstimatedUseful Lives inYearsYear Ended September 30, 2019 2018LandN/A$1,436 $1,348Buildings and improvements5-2013,608 12,479Machinery and equipment3-1030,600 27,443Information systems2-87,945 7,854Furniture and fixtures5-71,587 1,579 $55,176 $50,703Less-Accumulated depreciation (29,560) (25,613)Construction in progress 130 274Property and equipment, net $25,746 $25,364Depreciation expense was $5,607, $4,759 and $3,840, respectively, for the years ended September 30, 2019, 2018 and 2017. 6. PER SHARE INFORMATIONBasic earnings per share is calculated as income (loss) available to common stockholders, divided by the weighted average number of common shares outstandingduring the period. If the effect is dilutive, participating securities are included in the computation of basic earnings per share. Our participating securities do nothave a contractual obligation to share in the losses in any given period. As a result, these participating securities will not be allocated any losses in the periods ofnet losses, but will be allocated income in the periods of net income using the two-class method.The following table reconciles the components of the basic and diluted earnings (loss) per share for the years ended September 30, 2019, 2018 and 2017: Year Ended September 30, 2019 2018 2017Numerator: Net income (loss) attributable to common shareholders of IES Holdings, Inc.$32,950 $(14,113) $13,275Increase (decrease) in noncontrolling interest— (44) 44Net income attributable to restricted shareholders of IES Holdings, Inc.256 — 103Net income (loss) attributable to IES Holdings, Inc.$33,206 $(14,157) $13,422 Denominator: Weighted average common shares outstanding — basic21,082,012 21,196,388 21,280,549Effect of dilutive stock options and non-vested securities233,233 — 252,705Weighted average common and common equivalent shares outstanding — diluted21,315,245 21,196,388 21,533,254 Earnings (loss) per share attributable to IES Holdings, Inc.: Basic$1.56 $(0.67) $0.62Diluted$1.55 $(0.67) $0.62For the years ended September 30, 2019 and September 30, 2017, the average price of our common shares exceeded the exercise price of outstanding options;therefore, outstanding stock options were included in the computation of fully diluted earnings per share.When an entity has a net loss, it is prohibited from including potential common shares in the computation of diluted per share amounts. Accordingly, we haveutilized basic shares outstanding to calculate both basic and diluted loss per share for the year ended September 30, 2018. The number of potential anti-dilutiveshares excluded from the calculation was 301,879 shares for the year ended September 30, 2018. 55 7. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTSActivity in our allowance for doubtful accounts on accounts receivable consists of the following: Year Ended September 30, 2019 2018Balance at beginning of period$868 $650Additions to costs and expenses552 515Deductions for uncollectible receivables written off, net of recoveries(236) (297)Balance at end of period$1,184 $868Accounts payable and accrued expenses consist of the following: Year Ended September 30, 2019 2018Accounts payable, trade$85,276 75,293Accrued compensation and benefits42,828 34,058Accrued insurance liabilities6,683 6,202Other accrued expenses18,122 15,038 $152,909 130,591Other non-current assets are comprised of the following: Year Ended September 30, 2019 2018Executive Savings Plan assets$763 $747Securities and equity investments408 558Other3,767 4,760Total$4,938 $6,065 8. DEBTDebt consists of the following: Year Ended September 30, 2019 2018Revolving loan (long-term debt)$— $30,247Debt issuance costs (1)— (912)Other long-term debt299 229Total debt$299 $29,564(1) At September 30, 2019, the remaining unamortized debt issuance costs of $782 were reclassified to Other non-current assets on the Consolidated Balance Sheet.At September 30, 2019, we had no outstanding borrowings under our revolving credit facility, $6,468 in outstanding letters of credit and $93,532 available to usunder our revolving credit facility with Wells Fargo Bank, N.A. ("Wells Fargo"). All amounts outstanding under our revolving credit facility are due and payablein September 2024, upon expiration of our revolving credit facility, and all amounts described as available are available without triggering our financial covenantunder the Amended Credit Agreement (as defined below).Our interest rate on our outstanding borrowings under our revolving credit facility was 4.25% at September 30, 2018. For the years ended September 30, 2019,2018 and 2017, we incurred interest expense of $1,857, $1,946 and $1,702, respectively.The Revolving Credit Facility56 We maintain a $100,000 revolving credit facility with Wells Fargo that matures in September 2024, pursuant to a Second Amended and Restated Credit andSecurity Agreement with Wells Fargo Bank dated as of April 10, 2017, which was amended on July 14, 2017, August 2, 2017, July 23, 2018, May 17, 2019 andSeptember 6, 2019 (as amended, the “Amended Credit Agreement”). The Fourth Amendment to the Second Amended and Restated Credit and SecurityAgreement, which was entered into on May 20, 2019, permits the Company to repurchase up to 1.0 million additional shares of common stock pursuant to itspreviously authorized stock repurchase program for an aggregate purchase price (including for any remaining shares under the previous share repurchaseauthorization) not to exceed $25,000. The Fifth Amendment to the Second Amendment and Restated Credit and Security Agreement, which was entered into onSeptember 6, 2019, reduced the interest rate margin applicable to borrowings by 50 basis points, removed the Company's minimum EBITDA financial covenant,granted pre-approval for acquisitions meeting certain conditions with an aggregate purchase price of up to $25,000, and reduced the minimum liquidity covenantfrom 30% to 20% of the maximum revolver amount.Terms of the Amended Credit AgreementThe Amended Credit Agreement contains other customary affirmative, negative and financial covenants, as well as events of default.As of September 30, 2019, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain:• a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing four-quarter basis at the end of eachquarter, of at least 1.1 to 1.0; and• minimum Liquidity (as defined in the Amended Credit Agreement) of at least twenty percent (20%) of the Maximum Revolver Amount (as defined inthe Amended Credit Agreement), or $20,000; with, for purposes of this covenant, at least fifty percent (50%) of our Liquidity comprised of ExcessAvailability (as defined in the Amended Credit Agreement).At September 30, 2019, our Liquidity was $112,467 and our Excess Availability was $93,532 (or greater than 50% of minimum Liquidity), our Fixed ChargeCoverage Ratio was 4.7:1.0.Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve monthEBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and allRestricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind,amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the creditfacility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and allRestricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if any acquisition is consented to by the lenderafter the date of the Amended Credit Agreement, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving proforma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of eventswhich are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed toby the lender).If in the future our Liquidity falls below $20,000 (or Excess Availability falls below 50% of our minimum Liquidity), our Fixed Charge Coverage Ratio is lessthan 1.1:1.0, or if we otherwise fail to perform or otherwise comply with certain of our covenants or other agreements under the Amended Credit Agreement, itwould result in an event of default under the Amended Credit Agreement, which could result in any indebtedness we may take on becoming immediately due andpayable.9. LEASESWe enter into operating leases for many of our facilities, vehicle and equipment needs. These leases allow us to retain cash, and we pay a monthly lease rental fee.At the end of the lease, we have no further obligation to the lessor. We may cancel or terminate a lease before the end of its term. Typically, we would be liable tothe lessor for various lease cancellation or termination costs and the difference between the fair market value of the leased asset and the implied book value of theleased asset as calculated in accordance with the lease agreement.For a discussion of leases with certain related parties which are included below, see Note 13, “Related-Party Transactions.”Rent expense was $10,553, $7,680 and $6,990 for the years ended September 30, 2019, 2018 and 2017, respectively.Future minimum lease payments under these non-cancelable operating leases that had commenced as of September 30, 2019 with terms in excess of one year areas follows:57 Year Ended September 30:2020$8,10120216,23520224,75020233,13920242,130Thereafter3,595Total$27,950 Some of the lease agreements entered into will not commence until the year ended September 30, 2020. The total future undiscounted cash flows related to leaseagreements committed to but not yet commenced as of September 30, 2019, is $1,964.We also entered into two large building lease renewals at our InfrastructureSolutions segment in October 2019 that will commence in the year ended September 30, 2020 and have total future undiscounted cash flows of $2,422.10. INCOME TAXESFederal and state income tax provisions are as follows: Year Ended September 30, 2019 2018 2017Federal: Current$(1,330) $(2,345) $(3,092)Deferred5,908 38,744 6,384State: Current2,312 1,536 1,432Deferred(227) 216 487Total provision for income taxes$6,663 $38,151 $5,211Actual income tax expense differs from income tax expense computed by applying the U.S. federal statutory corporate rate to income (loss) before income taxesas follows: Year Ended September 30, 2019 2018 2017Provision at the statutory rate (1)$8,430 $5,973 $6,582Increase resulting from: Non-deductible expenses1,277 1,241 1,173State income taxes, net of federal deduction2,009 1,193 1,003Change in valuation allowance— 1,761 142Rate change— 31,333 —Other— 183 17Decrease resulting from: Share-based compensation(556) (238) (207)Change in valuation allowance(83) — —Contingent tax liabilities(3,967) (1,908) (3,499)State deferred true up— (1,387) —Other(447) — —Total provision for income taxes$6,663 $38,151 $5,211(1) A statutory rate of 21% was used in 2019, 24.53% in 2018 and 35% in 2017. The lower effective tax rate used in 2019 and 2018 is related to the enactment of Tax Cuts and Jobs Actenacted on December 22, 2017.Deferred income tax provisions result from temporary differences in the recognition of income and expenses for financial reporting purposes and for income taxpurposes. The income tax effects of these temporary differences, representing deferred income tax assets and liabilities, result principally from the following:58 Year Ended September 30, 2019 2018Deferred income tax assets: Allowance for doubtful accounts$245 $207Accrued expenses9,783 8,054Net operating loss carryforward39,045 46,881Various reserves1,396 1,172Equity losses in affiliate119 119Share-based compensation672 665Capital loss carryforward74 94Other1,137 712Subtotal52,471 57,904Less valuation allowance4,044 4,127Total deferred income tax assets48,427 53,777Deferred income tax liabilities: Property and equipment840 1,122Intangible assets5,978 5,499Other735 576Total deferred income tax liabilities7,553 7,197Net deferred income tax assets$40,874 $46,580In fiscal 2019 and 2018, the valuation allowance on our deferred tax assets decreased by $83 and increased by $1,761, respectively, which is included in “Provision(benefit) for income taxes” in our Consolidated Comprehensive Income Statement.As of September 30, 2019, we had available approximately $306,324 of federal net tax operating loss carry forward for federal income tax purposes, including$143,577 from net operating losses on which no tax benefit has been recognized and has not been recorded as a deferred tax asset. This carry forward, which mayprovide future tax benefits, will begin to expire in 2026. As of September 30, 2019, we had available approximately $94,007 state net tax operating loss carryforwards, including $8,722 from net operating losses on which no tax benefit has been recognized and has not been recorded as a deferred tax asset. The carryforwards, which may provide future tax benefits, will begin to expire in 2020. We have provided valuation allowances on all net operating losses where it isdetermined it is more likely than not that they will expire without being utilized. In assessing the realizability of deferred tax assets at September 30, 2019, we considered whether it was more likely than not that some portion or all of thedeferred tax assets will not be realized. Our realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in whichthese temporary differences become deductible. As a result, we have recorded a net deferred tax asset of $40,874 on our Consolidated Balance Sheets. We willcontinue to evaluate the appropriateness of our remaining deferred tax assets and need for valuation allowances on a quarterly basis. Further, any future reductionin the federal statutory tax rate could result in a charge to reduce the book value of the net deferred tax assets recorded on our Consolidated Balance Sheet. As a result of a 2006 reorganization and related adjustment to the book basis in goodwill, we have tax basis in excess of book basis in amortizable goodwill ofapproximately $23,050. The tax basis in amortizable goodwill in excess of book basis is not reflected as a deferred tax asset. To the extent the amortization of theexcess tax basis results in a cash tax benefit, the benefit will first go to reduce goodwill, then other long-term intangible assets, and then tax expense. GAAP requires financial statement reporting of the expected future tax consequences of uncertain tax return reporting positions on the presumption that all relevanttax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but it prohibits discounting of any ofthe related tax effects for the time value of money. The evaluation of a tax position is a two-step process. The first step is the recognition process to determine if it ismore likely than not that a tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position. Thesecond step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount ofbenefit/expense to recognize in the financial statements. The tax position is measured at the largest amount of benefit/expense that is more likely than not of beingrealized upon ultimate settlement. A reconciliation of the beginning and ending balances of unrecognized tax benefit is as follows:59 Year Ended September 30, 2019 2018Balance at beginning of period$30,256 $51,968Additions for position related to current year93 13Additions for positions of prior years19 272Reduction resulting from the lapse of the applicable statutes of limitations4,074 3,361Reduction resulting from rate change— 18,636Balance at end of period$26,294 $30,256As of September 30, 2019, and 2018, $26,294 and $30,256, respectively, of unrecognized tax benefits would result in a decrease in the provision for income taxexpense. We anticipate that approximately $1,573 in liabilities for unrecognized tax benefits, including accrued interest, primarily from net operating losses onwhich no tax benefit has been recognized, may be reversed in the next twelve months. The reversal is predominately due to the expiration of the statutes oflimitation for unrecognized tax benefits.We had approximately $43 and $35 accrued for the payment of interest and penalties at September 30, 2019, and 2018, respectively. We recognize interest andpenalties related to unrecognized tax benefits as part of the provision for income taxes. The tax years ended September 30, 2017, and forward are subject to federal audit as are tax years prior to September 30, 2017, to the extent of unutilized netoperating losses generated in those years. The tax years ended September 30, 2016, and forward are subject to state audits as are tax years prior to September 30,2016, to the extent of unutilized net operating losses generated in those years. 11. OPERATING SEGMENTSWe manage and measure performance of our business in four distinct operating segments: Commercial & Industrial, Communications, Infrastructure Solutions andResidential. These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes ofallocating resources and assessing performance. The Company’s CODM is its Chief Executive Officer.Transactions between segments, if any, are eliminated in consolidation. Our corporate office provides general and administrative, as well as support services, to ourfour operating segments. Management allocates certain shared costs between segments for selling, general and administrative expenses and depreciation expense.Segment information for the years ended September 30, 2019, 2018 and 2017 is as follows: Year Ended September 30, 2019 Commercial &Industrial Communications InfrastructureSolutions Residential Corporate TotalRevenues$305,624 $321,246 $136,790 $313,336 $— $1,076,996Cost of services275,722 264,746 105,863 248,562 — 894,893Gross profit29,902 56,500 30,927 64,774 — 182,103Selling, general and administrative27,815 31,850 18,664 46,864 15,382 140,575Contingent consideration— (97) (277) — — (374)Loss (gain) on sale of assets(30) (6) 105 (17) — 52Income (loss) from operations$2,117 $24,753 $12,435 $17,927 $(15,382) $41,850Other data: Depreciation and amortization expense$2,563 $1,513 $4,528 $852 $101 $9,557 Capital expenditures$2,402 $973 $1,377 $1,412 $136 $6,300 Total assets$82,050 $109,263 $116,867 $63,903 $73,175 $445,25860 Year Ended September 30, 2018 Commercial &Industrial Communications InfrastructureSolutions Residential Corporate TotalRevenues$274,299 $219,655 $97,163 $285,711 $— $876,828Cost of services244,656 179,518 75,337 227,355 — 726,866Gross profit29,643 40,137 21,826 58,356 — 149,962Selling, general and administrative27,031 26,003 18,293 41,401 11,192 123,920Contingent consideration(100) (85) 288 — — 103Loss (gain) on sale of assets(37) (4) 18 8 — (15)Income (loss) from operations$2,749 $14,223 $3,227 $16,947 $(11,192) $25,954Other data: Depreciation and amortization expense$2,197 $1,247 $4,672 $637 $107 $8,860 Capital expenditures$2,216 $647 $735 $932 $33 $4,563 Total assets$89,729 $80,528 $109,506 $55,176 $87,055 $421,994 Year Ended September 30, 2017 Commercial &Industrial Communications InfrastructureSolutions Residential Corporate TotalRevenues$227,606 $225,275 $83,824 $274,039 $— $810,744Cost of services208,619 187,419 63,399 210,809 — 670,246Gross profit18,987 37,856 20,425 63,230 — 140,498Selling, general and administrative20,170 24,219 17,859 43,689 14,433 120,370Contingent consideration— — (145) — — (145)Loss (gain) on sale of assets(32) (1) (79) 43 — (69)Income (loss) from operations$(1,151) $13,638 $2,790 $19,498 $(14,433) $20,342Other data: Depreciation and amortization expense$1,648 $740 $6,412 $565 $269 $9,634 Capital expenditures$1,241 $2,046 $538 $561 $203 $4,589 Total assets$84,756 $63,917 $106,114 $51,994 $117,713 $424,49412. STOCKHOLDERS’ EQUITYEquity Incentive PlanThe Company’s 2006 Equity Incentive Plan, as amended and restated (the “Equity Incentive Plan”), provides for grants of stock options as well as grants of stock,including restricted stock. Approximately 3.0 million shares of common stock are authorized for issuance under the Equity Incentive Plan, of which approximately824,676 shares were available for issuance at September 30, 2019.Stock Repurchase ProgramIn 2015, our Board of Directors authorized a stock repurchase program for the purchase from time to time of up to 1.5 million shares of the Company’s commonstock, and on May 2, 2019, authorized the repurchase from time to time of up to an additional 1.0 million shares of our common stock under the stock repurchaseprogram. Share purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The timingand amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and otherfactors. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which allows repurchases under pre-set terms at times when theCompany might otherwise be prevented from purchasing under insider trading laws or because of self-imposed blackout periods. The program does not require theCompany to purchase any specific number of shares and may be modified, suspended or reinstated at any time at the Company’s discretion and without notice.We repurchased 467,819 shares of our common stock during the year ended September 30, 2019, in open market transactions at an average price of $17.34 pershare.61 We repurchased 100,627 shares of our common stock during the year ended September 30, 2018, in open market transactions at an average price of $15.41 pershare.Treasury StockDuring the year ended September 30, 2019, we issued 216,679 shares of common stock from treasury and repurchased 97,003 shares of common stock from ouremployees to satisfy statutory tax withholding requirements upon the vesting of certain performance phantom stock units under the Equity Incentive Plan. We alsorepurchased 467,819 shares of common stock on the open market pursuant to our stock repurchase program. During the year ended September 30, 2019, we issued1,923 unrestricted shares of common stock from treasury to members of our Board of Directors as part of their overall compensation and 22,500 unrestrictedshares to satisfy the exercise of outstanding options. We also issued 283,195 shares out of treasury for restricted shares granted upon the appointment of theCompany’s Chief Executive Officer in March 2019 (as described below).During the year ended September 30, 2018, we repurchased 32,832 shares of common stock from our employees to satisfy minimum tax withholding requirementsupon the vesting of restricted stock under the Equity Incentive Plan and repurchased 100,627 shares of common stock on the open market pursuant to our stockrepurchase program. During the year ended September 30, 2018, we issued 520 unrestricted shares of common stock from treasury to members of our Board ofDirectors as part of their overall compensation and 1,500 unrestricted shares to satisfy the exercise of outstanding options.Restricted StockDuring the years ended September 30, 2019, 2018, and 2017, we recognized $776, $256, and $538, respectively, in compensation expense related to our restrictedstock awards. At September 30, 2019, the unamortized compensation cost related to outstanding unvested restricted stock was $3,024. A summary of restrictedstock awards for the years ended September 30, 2019, 2018, and 2017 is provided in the table below: Year Ended September 30, 2019 2018 2017Unvested at beginning of year— 140,668 174,334Granted283,195 — —Vested— (140,668) (31,409)Forfeited— — (2,257)Unvested at end of year283,195 — 140,668The fair value of shares vesting during the years ended September 30, 2019, 2018, and 2017 was $0, $2,201 and $460, respectively. Fair value was calculated asthe number of shares vested times the market price of shares on the date of vesting. At September 30, 2019, we had unvested restricted stock of $3,800. Vesting ofthis restricted stock is as follows:62 1.Time-Based Award: 80,000 restricted shares vest over a four-year period ending March 4, 2023, based on continued employment with the Company, with20,000 shares vesting each year. 2.Long-term Incentive Plan Award: Subject to a service requirement, 23,195 restricted shares vest contingent upon the Company achieving specifiedperformance targets for the three-year period ending September 30, 2021. 3.Stock Price-Based Awards: Subject to a service requirement, 180,000 restricted shares vest in four tranches when the closing price per share of theCompany's common stock equals or exceeds the price specified below for such tranche for any 20 trading days out of 25 consecutive trading days (the"Vesting Stock Price") at any time during the five years ending March 4, 2024. a.Tranche 1: 60,000 shares with a Vesting Stock Price of $35 per share; b.Tranche 2: 40,000 shares with a Vesting Stock Price of $40 per share; c.Tranche 3: 40,000 shares with a Vesting Stock Price of $45 per share; d.Tranche 4: 40,000 shares with a Vesting Stock Price of $50 per share;All the restricted shares granted under the Equity Incentive Plan (vested or unvested) participate in dividends issued to common shareholders, if any.Director Phantom Stock UnitsDirector phantom stock units (“Director PSUs”) are primarily granted to the members of the Board of Directors as part of their overall compensation. TheseDirector PSUs are paid via unrestricted stock grants to each director upon their departure from the Board of Directors. We record compensation expense for the fullvalue of the grant on the date of grant. For the years ended September 30, 2019, 2018, and 2017, we recognized $300, $189, and $167, respectively, incompensation expense related to these grants. At September 30, 2019, the Company had an aggregate of 210,386 Director PSUs outstanding.Employee Phantom Stock UnitsAn employee phantom stock unit (an “Employee PSU”) is a contractual right to receive one share of the Company’s common stock. Depending on the terms ofeach grant, Employee PSUs may vest upon the achievement of certain specified performance objectives and continued performance of services, or may vest basedon continued performance of services through the vesting date. On February 6, 2019, the Company granted Employee PSUs, which, subject to the achievement ofcertain performance metrics, could result in the issuance of 264,815 shares of common stock. Of these Employee PSUs, 97,985 Employee PSUs were forfeitedduring the year ended September 30, 2019, and 3,991 Employee PSUs vested in conjunction with the departure of Company employees. As of September 30,2019, a maximum of 162,840 shares of common stock may be issued under outstanding Employee PSUs.During the year ended September 30, 2019, we recognized compensation expense of $1,151 related to these grants. The vesting of these awards is subject to eitherthe achievement of specified levels of cumulative net income before taxes or specified stock price levels and continued performance of services through mid-December 2021, or based on continued performance through the vesting date alone. At September 30, 2019, redemption of a portion of the awards is deemedprobable.During the year ended September 30, 2018, we recognized a benefit to compensation expense of $581 related to Employee PSU grants. This benefit was the resultof a reduction in the estimated number of units deemed probable of vesting, based on the projected achievement of specified performance objectives.Stock OptionsWe did not issue stock options during the years ended September 30, 2019, 2018 and 2017.63 The following table summarizes activity relating to options granted in the years ended September 30, 2013 and 2015. Shares Weighted AverageExercise PriceOutstanding, September 30, 201679,500 $6.43Options granted— —Exercised33,750 6.46Forfeited and canceled— —Outstanding, September 30, 201745,750 $6.42Options granted— —Exercised1,500 7.21Forfeited and canceled— —Outstanding, September 30, 201844,250 $6.39Options granted— —Exercised22,500 6.43Forfeited and canceled— —Outstanding, September 30, 201921,750 $6.35The following table summarizes options outstanding and exercisable at September 30, 2019:Outstanding andExercisable as ofSeptember 30, 2019 Remaining Contractual Lifein Years Weighted-AverageExercise Price13,000 3.58 $5.761,000 5.29 $7.277,750 5.34 $7.2121,750 $6.35Our 2013 and 2015 options cliff vested at the end of a two year period ending at the anniversary date of the grant. All options expire ten years from the grant dateif they are not exercised. Upon exercise of stock options, it is our policy to first issue shares from treasury, then issue new shares. Unexercised stock optionsexpire May 2023, January 2025 and February 2025.During the years ended September 30, 2019, 2018, and 2017, we recognized zero, zero and $23, respectively, in compensation expense related to our stock optionawards. The intrinsic value of stock options outstanding and exercisable was $254 and $292 at September 30, 2019, and 2018, respectively. The intrinsic value iscalculated as the difference between the fair value as of the end of the period and the exercise price of the stock options. 13. RELATED-PARTY TRANSACTIONSThe Company is a party to a sublease agreement with Tontine Associates, for corporate office space in Greenwich, Connecticut. The lease was renewed inNovember 2019, with monthly rent of approximately $8. Payments by the Company are at a rate consistent with that paid by Tontine Associates to its landlord.See Note 3, “Controlling Shareholder” for additional information regarding Tontine.14. EMPLOYEE BENEFIT PLANS401(k) PlanIn November 1998, we established the IES Holdings, Inc. 401(k) Retirement Savings Plan. All full-time IES employees are eligible to participate on the first dayof the month subsequent to completing sixty days of service and attaining age twenty-one. Participants become vested in our matching contributions followingthree years of service. We also maintain several subsidiary retirement savings plans. We recognized $2,144, $1,895, and $1,157 in matching expenses in fiscalyears 2019, 2018, and 2017, respectively.64 Executive Savings PlanUnder the Executive Deferred Compensation Plan adopted on July 1, 2004 (the “Executive Savings Plan”), certain employees are permitted to defer a portion (upto 75%) of their base salary and/or bonus for a plan year. The Human Resources and Compensation Committee of the Board of Directors may, in its solediscretion, credit one or more participants with an employer deferral (contribution) in such amount as the Committee may choose (“Employer Contribution”). TheEmployer Contribution, if any, may be a fixed dollar amount, a fixed percentage of the participant’s compensation, base salary, or bonus, or a “matching” amountwith respect to all or part of the participant’s elective deferrals for such plan year, and/or any combination of the foregoing as the Committee may choose. Nocompensation earned during the years ended September 30, 2019, 2018, or 2017 was deferred under this plan.Post Retirement Benefit PlansCertain individuals at one of the Company’s locations are entitled to receive fixed annual payments that reach a maximum amount, as specified in the relatedagreements, for a ten year period following retirement or, in some cases, the attainment of 62 years of age. We recognize the unfunded status of the plan in accruedexpenses and other non-current liabilities in our Consolidated Balance Sheet. Benefits vest 50% after ten years of service, which increases by 10% per annum untilbenefits are fully vested after 15 years of service. We had an unfunded benefit liability of $738 and $755 recorded as of September 30, 2019 and 2018,respectively. We recognized compensation expense related to these agreements of $42, zero and zero during the years ended September 30, 2019, 2018, and 2017,respectively.Multiemployer Pension PlanThe Infrastructure Solutions segment participates in a multiemployer direct benefit pension plan for employees covered under our collective bargaining agreement.We do not administer the plan. We do not significantly participate in this plan. As of December 31, 2018, this plan was funded at 83.27%. 15. FAIR VALUE MEASUREMENTSFair value is considered the price to sell an asset, or transfer a liability, between market participants on the measurement date. Fair value measurements assume thatthe asset or liability is (1) exchanged in an orderly manner, (2) the exchange is in the principal market for that asset or liability, and (3) the market participants areindependent, knowledgeable, able and willing to transact an exchange. Fair value accounting and reporting establishes a framework for measuring fair value bycreating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements.Considerable judgment is required to interpret the market data used to develop fair value estimates. As such, the estimates presented herein are not necessarilyindicative of the amounts that could be realized in a current exchange. The use of different market assumptions and/or estimation methods could have a materialeffect on the estimated fair value.At September 30, 2019, financial assets and liabilities measured at fair value on a recurring basis were limited to our Executive Deferred Compensation Plan,under which certain employees are permitted to defer a portion of their base salary and/or bonus for a Plan Year (as defined in the plan), and contingentconsideration liabilities related to certain of our acquisitions.Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2019 and 2018, are summarized in the following tables by the type ofinputs applicable to the fair value measurements: September 30, 2019 Total Fair Value Quoted Prices(Level 1) SignificantUnobservable (Level3)Executive savings plan assets$763 $763 $—Executive savings plan liabilities(646) (646) —Contingent consideration liability(11) — (11)Total$106 $117 $(11)65 September 30, 2018 Total Fair Value Quoted Prices(Level 1) SignificantUnobservable (Level3)Executive savings plan assets$747 $747 $—Executive savings plan liabilities(631) (631) —Contingent consideration liability(680) — (680)Total$(564) $116 $(680)In fiscal years 2016, 2017, and 2018, we entered into contingent consideration arrangements related to certain acquisitions. Please see Note 19, “BusinessCombinations” for further discussion. At September 30, 2019, we estimated the fair value of these contingent consideration liabilities at $11. The table belowpresents a reconciliation of the fair value of these obligations, which used significant unobservable inputs (Level 3). Contingent ConsiderationAgreementFair Value at September 30, 2018$680Settlements(295)Net adjustments to fair value(374)Fair Value at September 30, 2019$11Below is a description of the inputs used to value the assets summarized in the preceding tables:Level 1 — Inputs represent unadjusted quoted prices for identical assets exchanged in active markets.Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets exchanged in active or inactivemarkets; quoted prices for identical assets exchanged in inactive markets; and other inputs that are considered in fair value determinations of the assets.Level 3 — Inputs include unobservable inputs used in the measurement of assets. Management is required to use its own assumptions regarding unobservableinputs because there is little, if any, market activity in the assets or related observable inputs that can be corroborated at the measurement date. 16. INVENTORY Inventories consist of the following components: September 30, 2019 2018Raw materials$4,104 $4,453Work in process6,301 5,168Finished goods1,861 1,746Parts and supplies9,277 9,599Total inventories$21,543 $20,96666 17. GOODWILL AND INTANGIBLE ASSETSGoodwillThe following summarizes changes in the carrying value of goodwill by segment for the years ended September 30, 2019 and 2018: Commercial &Industrial Communications InfrastructureSolutions Residential TotalBalance at September 30, 2017$7,176 $— $30,886 $8,631 $46,693Acquisitions (Note 19)— 2,892 — 1,348 4,240Purchase accounting adjustments(200) (76) 45 — (231)Balance at September 30, 20186,976 2,816 30,931 9,979 50,702Divestitures— — (119) — (119)Purchase accounting adjustments— — — 39 39Balance at September 30, 2019$6,976 $2,816 $30,812 $10,018 $50,622Based upon the results of our annual impairment assessment, the fair value of our each of our four segments exceeded the book value at September 30, 2019, andwarranted no impairment.Intangible AssetsIntangible assets consist of the following: September 30, 2019 Estimated UsefulLives (in Years) Gross CarryingAmount AccumulatedAmortization NetTrademarks/trade names5 - 20 $5,084 $(1,267) $3,817Technical library20 400 (121) 279Customer relationships6 - 15 33,539 (11,051) 22,488Non-competition arrangements5 40 (9) 31Backlog and construction contracts1 599 (591) 8Total $39,662 $(13,039) $26,623 September 30, 2018 Estimated UsefulLives (in Years) Gross CarryingAmount AccumulatedAmortization NetTrademarks/trade names5 - 20 $5,084 $(831) $4,253Technical library20 400 (101) 299Customer relationships6 - 15 33,539 (7,870) 25,669Non-competition arrangements5 40 (1) 39Backlog and construction contracts1 2,562 (2,232) 330Total $41,625 $(11,035) $30,590For the years ended September 30, 2019, 2018, and 2017, amortization expense of intangible assets was $3,950, $4,101 and $5,766, respectively. The weightedaverage useful life of our intangible assets at September 30, 2019, was 9.3 years. Our estimated future amortization expense for years ended September 30 is asfollows:67 Year Ended September 30,2020$3,22220213,24920223,42220232,78520242,240Thereafter11,705Total$26,62318. COMMITMENTS AND CONTINGENCIESLegal MattersFrom time to time we are a party to various claims, lawsuits and other legal proceedings that arise in the ordinary course of business. We maintain variousinsurance coverages to minimize financial risk associated with these proceedings. None of these proceedings, separately or in the aggregate, are expected to have amaterial adverse effect on our financial position, results of operations or cash flows. With respect to all such proceedings, we record reserves when it is probablethat a liability has been incurred and the amount of loss can be reasonably estimated. We expense routine legal costs related to these proceedings as they areincurred. As of September 30, 2019, we did not have any significant outstanding legal matters.Risk-ManagementWe retain the risk for workers’ compensation, employer’s liability, automobile liability, construction defects, general liability and employee group health claims,as well as pollution coverage, resulting from uninsured deductibles per accident or occurrence which are generally subject to annual aggregate limits. Our generalliability program provides coverage for bodily injury and property damage. In many cases, we insure third parties, including general contractors, as additionalinsureds under our insurance policies. Losses are accrued based upon our known claims incurred and an estimate of claims incurred but not reported. As a result,many of our claims are effectively self-insured. Many claims against our insurance are in the form of litigation. At September 30, 2019 and 2018, we had $6,683and $6,202, respectively, accrued for self-insurance liabilities. We are also subject to construction defect liabilities, primarily within our Residential segment. As ofSeptember 30, 2019 and 2018, we had $90 and $171, respectively, reserved for these claims. Because the reserves are based on judgment and estimates, andinvolve variables that are inherently uncertain, such as the outcome of litigation and an assessment of insurance coverage, there can be no assurance that theultimate liability will not be higher or lower than such estimates or that the timing of payments will not create liquidity issues for the Company.Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral. This is common in the insurance industry. To date, wehave not had a situation where an underwriter has had reasonable cause to effect payment under a letter of credit. At September 30, 2019, $6,268 of ouroutstanding letters of credit was utilized to collateralize our insurance program.SuretyAs of September 30, 2019, the estimated cost to complete our bonded projects was approximately $88,698. We evaluate our bonding requirements on a regularbasis, including the terms offered by our sureties. We believe the bonding capacity presently provided by our current sureties is adequate for our current operationsand will be adequate for our operations for the foreseeable future. Posting letters of credit in favor of our sureties reduces the borrowing availability under ourrevolving credit facility.Other Commitments and ContingenciesSome of our customers and vendors require us to post letters of credit, or provide intercompany guarantees, as a means of guaranteeing performance under ourcontracts and ensuring payment by us to subcontractors and vendors. If our customer has reasonable cause to effect payment under a letter of credit, we would berequired to reimburse our creditor for the letter of credit. At September 30, 2019, $200 of our outstanding letters of credit were to collateralize our vendors.From time to time, we may enter into firm purchase commitments for materials, such as copper or aluminum wire, which we expect to use in the ordinary course ofbusiness. These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specific intervals at a fixedprice over the term. As of September 30, 2019, we had no such significant commitments.68 19. BUSINESS COMBINATIONSThe Company completed two acquisitions in the year ended September 30, 2018, for a total aggregate consideration of $7,413, which includes cash considerationpaid at closing of $7,091, cash consideration paid subsequent to closing of $125, cash consideration payable in the next fiscal year of $15, and contingentconsideration payable in July 2019 and 2020 with aggregate acquisition date fair value estimated at $182.•Azimuth Communications, Inc. (“Azimuth”) – On April 6, 2018, the Company’s Communications segment acquired all of the outstanding capital stockof Azimuth, a Portland, Oregon-based provider of design and integration services for structured cabling, physical security, access control systems,distributed antenna systems, wireless access, and audio visual systems. The acquisition of Azimuth has accelerated our Communications segment'sexpansion into the Pacific Northwest market, which the Company believes to be an attractive market.•Electrical Contractors North, Inc. ("ECNI") – On July 31, 2018, the Company’s Residential segment acquired substantially all of the assets of ECNI, aSalt Lake City, Utah-based provider of electrical contracting for multi-family residential and hotel construction. We believe the acquisition of ECNIfurthers our Residential segment’s growth strategy by providing a foothold in the Salt Lake City market.The Company accounted for these fiscal 2018 transactions under the acquisition method of accounting, which requires recording assets and liabilities at fair value(Level 3). The valuation of the assets and liabilities assumed for our fiscal 2018 acquisitions as of the acquisition dates is as follows:Current assets$1,767Property and equipment590Intangible assets (primarily customer relationships)3,182Goodwill4,164Current liabilities(1,580)Long term liabilities(14)Deferred tax liability(696)Net assets acquired$7,413With regard to goodwill, the balance is attributable to the workforce of the acquired business and other intangibles that do not qualify for separate recognition. Inconnection with the Azimuth and ECNI acquisitions, we acquired aggregate goodwill of $4,164, of which $1,448 is tax deductible.20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)Quarterly financial information for the years ended September 30, 2019 and 2018 is summarized as follows: Year Ended September 30, 2019 First Second Third Fourth Quarter Quarter Quarter QuarterRevenues$243,842 $256,914 $282,633 $293,607Gross profit$41,601 $43,235 $46,397 $50,870Net income (loss) attributable to IES Holdings, Inc.$6,884 $5,489 $10,972 $9,861 Earnings (loss) per share: Basic$0.32 $0.26 $0.52 $0.47Diluted$0.32 $0.26 $0.52 $0.4669 Year Ended September 30, 2018 First Second Third Fourth Quarter Quarter Quarter QuarterRevenues$198,300 $205,677 $232,576 $240,275Gross profit$33,064 $33,840 $42,537 $40,521Net income (loss) attributable to IES Holdings, Inc.$(29,569) $2,221 $8,516 $4,675 Earnings (loss) per share: Basic$(1.39) $0.11 $0.40 $0.22Diluted$(1.39) $0.11 $0.40 $0.22The sum of the individual quarterly earnings per share amounts may not agree with year-to-date earnings per share as each period’s computation is based on theweighted average number of shares outstanding during the period. 70 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A. Controls and ProceduresChanges in Internal Control Over Financial ReportingThere have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15 and 15d-15 under theExchange Act) during the fiscal quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’sinternal control over financial reporting.Disclosure Controls and ProceduresIn accordance with Rules 13a-15 and 15d-15 under the Exchange Act, we carried out an evaluation, under the supervision and with the participation ofmanagement, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end ofthe period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls andprocedures were effective as of September 30, 2019, to provide reasonable assurance that information required to be disclosed in our reports filed or submittedunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controlsand procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Actis accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure.Management’s Report on Internal Control over Financial ReportingManagement, including the Company’s Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internalcontrol over financial reporting for the Company. The Company’s internal control system was designed to provide reasonable assurance to the Company’sManagement and Directors regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal controlover financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the Internal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 framework). Based on this assessment, our managementdetermined that our disclosure controls and procedures were effective as of September 30, 2019.Ernst & Young LLP, an independent registered public accounting firm that has audited the Company’s financial statements as of and for the three-year periodended September 30, 2019, has issued a report on their audit of management’s internal control over financial reporting, which is included herein.Item 9B. Other InformationNone. 71 PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required to be included Item 10 of Part III of this Annual Report on Form 10-K is incorporated by reference from the section entitled "ExecutiveOfficers of the Registrant" in Part I of this Annual Report on Form 10-K and the sections entitled “Security Ownership of Certain Beneficial Owners andManagement;” “Report of the Audit Committee” and “Election of Directors” in the Company’s definitive Proxy Statement for its 2020 Annual Meeting ofStockholders (the “Proxy Statement”) to be filed with the SEC no later than January 28, 2020. Item 11. Executive CompensationThe information required to be included in Item 11 of Part III of this Annual Report on Form 10-K is incorporated by reference from the section entitled“Executive Compensation” in the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders MattersCertain information required to be included in Item 12 of Part III of this Annual Report on Form 10-K is incorporated by reference from the section entitled“Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement. Securities Authorized for Issuance Under Equity PlansThe following table provides information as of September 30, 2019 with respect to shares of our common stock that may be issued upon the exercise of options,warrants and rights granted to employees, consultants or members of the Board of Directors under the Company’s existing equity compensation plans. Foradditional information about our equity compensation plans, see Note 12, “Stockholders’ Equity” in the notes to our Consolidated Financial Statements set forth inItem 8. “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.Equity Compensation Plan InformationPlan Category (a) Number of Securitiesto be Issued UponExercise of OutstandingOptions, Warrants andRights (b) Weighted-AverageExercise Price ofOutstanding Options,Warrants and Rights (c) Number of SecuritiesRemaining Available forFuture Issuance UnderEquity Compensation Plans(Excluding SecuritiesReflected in Column (a))Equity compensation plans approved by security holders 162,840 $— 824,676 (1)Equity compensation plans not approved by security holders 21,750(2)$6.35 —(1) Represents shares available for issuance under the Company's 2006 Equity Incentive Plan, as amended and restated effective February 9, 2016 (the "Amended Plan"). Thisplan provides for the granting or awarding of stock options, stock, restricted stock and other forms of equity to employees (including officers), consultants and directors of theCompany. This includes 162,840 shares that may be issued pursuant to outstanding performance based phantom stock units ("PPSUs") based on achievement of performancemetrics, where applicable, and otherwise assuming the target award is met.(2) Represents shares issuable upon exercise of outstanding options granted under the Company’s 2006 Equity Incentive Plan (as amended and restated as of October 2007),which was in place prior to the Amended Plan. This includes 21,750 options with a weighted-average term of 4.29 years.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required to be included in Item 13 of Part III of this Annual Report on Form 10-K is incorporated by reference from the section entitled “CertainRelationships and Related Person Transactions” in the Proxy Statement.72 Item 14. Principal Accountant Fees and ServicesThe information required to be included in Item 14 of Part III of this Form 10-K is incorporated by reference from the section entitled “Audit Fees” in the ProxyStatement.PART IVItem 15. Exhibits, Financial Statement Schedules(a) Financial Statements and Supplementary Data, Financial Statement Schedules and ExhibitsSee Index to Financial Statements under Item 8. “ Financial Statements and Supplementary Data” of this Form 10-K.(b) ExhibitsExhibit No.Description2.1 —Agreement and Plan of Merger effective as of March 13, 2013, by and among Integrated Electrical Services, Inc. (n/k/aIES Holdings, Inc.), IES Subsidiary Holdings, Inc. and MISCOR Group, Ltd. (Attached as part of Annex A to the jointproxy statement/prospectus that is part of Amendment No. 4 to the Company's Registration Statement on Form S-4 filedon August 5, 2013) (the schedules and annexes have been omitted pursuant to Item 601(b)(2) of Regulation S-K)2.2 —First Amendment to Agreement and Plan of Merger, dated as of July 10, 2013, by and among Integrated ElectricalServices, Inc. (n/k/a IES Holdings, Inc.), IES Subsidiary Holdings, Inc. and MISCOR Group, Ltd. (Attached as part ofAnnex A to the joint proxy statement/prospectus that is part of Amendment No. 4 to the Company's RegistrationStatement on Form S-4 filed on August 5, 2013)2.3 —Stock Purchase Agreement dated as of June 1, 2016, by and among IES Infrastructure Solutions, LLC, IES Holdings,Inc., Technibus, Inc. and Technibus, LLC. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Reporton Form 8-K filed June 15, 2016)3.1 —Second Amended and Restated Certificate of Incorporation of IES Holdings, Inc., as amended by the Certificate ofAmendment thereto, effective May 24, 2016 (composite). (Incorporated by reference to Exhibit 3.1 to the Company’sQuarterly Report on Form 10-Q filed August 8, 2016)3.2 —Certificate of Designations of Series A Junior Participating Preferred Stock (Incorporated by reference to Exhibit 3.1 tothe Company’s Current Report on Form 8-K filed January 28, 2013)3.3 —Amended and Restated Bylaws of IES Holdings, Inc., effective November 6, 2019 (Incorporated by reference to Exhibit3.1 to the Company's Current Report on Form 8-K filed on November 8, 2019)4.1 —Specimen common stock certificate. (Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form10-K filed December 9, 2016)4.2 —Tax Benefit Protection Plan Agreement by and between IES Holdings, Inc. and American Stock Transfer & TrustCompany, LLC, as Rights Agent, dated as of November 8, 2016, including the form of Rights Certificate and Summaryof Stockholder Rights Plan attached thereto as Exhibits A and B, respectively (Incorporated by reference to Exhibit 4.1to the Company’s Current Report on Form 8-K filed November 9, 2016)4.3 —Registration Rights Agreement, dated May 12, 2006, by and among Integrated Electrical Services, Inc. (n/k/a IESHoldings, Inc.), Tontine Capital Partners, L.P. and certain of its affiliates and Southpoint Master Fund, L.P.(Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed May 17, 2006)4.4 —First Amendment to Registration Rights Agreement, dated September 11, 2007, by and among Integrated ElectricalServices, Inc. (n/k/a IES Holdings, Inc.), Tontine Capital Partners, L.P. and certain of its affiliates (Incorporated byreference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed December 14, 2012)10.1 —Restated Underwriting, Continuing Indemnity and Security Agreement, dated May 12, 2006, by Integrated ElectricalServices, Inc. (n/k/a IES Holdings, Inc.) and certain of its subsidiaries and affiliates in favor of Federal InsuranceCompany. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed May 17,2006)10.2 —First Amendment, dated as of October 30, 2006, to the Restated Underwriting, Continuing Indemnity, and SecurityAgreement, dated May 12, 2006, by Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.), certain of itssubsidiaries and Federal Insurance Company and certain of its affiliates. (Incorporated by reference to Exhibit 10.1 tothe Company’s Current Report on Form 8-K filed November 6, 2006)73 10.3 —Third Amendment, dated May 1, 2007, to the Restated Underwriting, Continuing Indemnity and Security Agreement,dated May 12, 2006, by Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.), certain of its subsidiaries andFederal Insurance Company and certain of its affiliates. (Incorporated by reference to Exhibit 10.1 to the Company’sCurrent Report on Form 8-K filed October 12, 2007)10.4 —Fourth Amendment to the Restated Underwriting, Continuing Indemnity and Security Agreement, dated May 12, 2006,by Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.), certain of its subsidiaries and Federal InsuranceCompany and certain of its affiliates.(Incorporated by reference to Exhibit 10.2 to the Company’s Current Report onForm 8-K filed October 12, 2007)10.5 —Rider to Add Principal/Indemnitor and Fifth Amendment, dated September 29, 2008, to Restated Underwriting,Continuing Indemnity, and Security Agreement, dated May 12, 2006, by Integrated Electrical Services, Inc. (n/k/a IESHoldings, Inc.), certain of its subsidiaries and Federal Insurance Company and certain of its affiliates. (Incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 24, 2008)10.6 —Agreement of Indemnity, dated May 7, 2010, by Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) andcertain of its present and future subsidiaries and affiliates and Chartis Property Casualty Company, Chartis InsuranceCompany of Canada, American Home Assurance Company, Commerce and Industry Insurance Company, Granite StateInsurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., NewHampshire Insurance Company and The Insurance Company of the State of Pennsylvania and any and all of theiraffiliates, subsidiaries, successors and assigns. (Incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K filed May 13, 2010)10.7 —Amendment No. 1 to Agreement of Indemnity, dated August 16, 2012, between Integrated Electrical Services, Inc.(n/k/a IES Holdings, Inc.) and certain of its present and future subsidiaries and affiliates and Chartis Property CasualtyCompany, Chartis Insurance Company of Canada, American Home Assurance Company, Commerce and IndustryInsurance Company, Granite State Insurance Company, Lexington Insurance Company, National Union Fire InsuranceCompany of Pittsburgh, Pa., New Hampshire Insurance Company and The Insurance Company of the State ofPennsylvania, and any and all of their affiliates, subsidiaries, successors and assigns (Incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed August 17, 2012)10.8 — Agreement of Indemnity, dated May 7, 2013, by Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) andcertain of its present and future subsidiaries and affiliates and XL Specialty Insurance Company, XL ReinsuranceAmerica, Inc. and Greenwich Insurance Company and their affiliates, subsidiaries, successors and assigns.(Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 13, 2013)10.9 —Agreement of Indemnity, September 9, 2016, by IES Holdings, Inc. and certain of its present and future subsidiariesand affiliates and Everest Reinsurance Company and Everest National Insurance Company, and their affiliated,associated and subsidiary companies, successors and assigns. (Incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed September 13, 2016)10.10 —General Agreement of Indemnity, July 14, 2017, by IES Holdings, Inc. and certain of its present and future subsidiariesand affiliates and Travelers Casualty and Surety Company of America, St. Paul Fire and Marine Insurance Company,and their affiliated, associated and subsidiary companies, successors and assigns. (Incorporated by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K filed July 14, 2017)10.11 —Second Amended and Restated Credit and Security Agreement, dated as of April 10, 2017, by and among IESHoldings, Inc., each of the other Borrowers and Guarantors named therein and Wells Fargo Bank, National Association.(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 10, 2017)10.12 —Joinder, Limited Consent and First Amendment to Second Amended and Restated Credit and Security Agreement, datedas of July 14, 2017, by and among IES Holdings, Inc., each of the other Borrowers and Guarantors named therein andWells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Reporton Form 10-Q filed on August 4, 2017)10.13 —Second Amendment to the Amended Credit Agreement, dated as of August 2, 2017, to Second Amended and RestatedCredit and Security Agreement, dated as of April 10, 2017, by and among IES Holdings, Inc., each of the otherBorrowers and Guarantors named therein and Wells Fargo Bank, National Association. (Incorporated by reference toExhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 4, 2017)10.14 —Third Amendment to Second Amended and Restated Credit and Security Agreement, dated as of July 23, 2018, by andamong IES Holdings, Inc., each of the other Borrowers and Guarantors named therein and Wells Fargo Bank, NationalAssociation. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 23,2018)74 10.15 —Fourth Amendment, dated as of May 20, 2019, to Second Amended and Restated Credit and Security Agreement, datedas of April 10, 2017, by and among IES Holdings, Inc., each of the other Borrowers and Guarantors named therein andWells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Reporton Form 10-Q filed August 2, 2019)10.16 —Fifth Amendment to Second Amended and Restated Credit and Security Agreement, dated as of September 6, 2019, byand among IES Holdings, Inc., each of the other Borrowers and Guarantors named therein and Wells Fargo Bank,National Association (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filedSeptember 9, 2019)10.17 —Sublease Agreement between Tontine Associates, L.L.C. and IES Shared Services, Inc., dated March 29, 2012(Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed May 15, 2012)10.18 —First Amendment between Tontine Associates, L.L.C., IES Shared Services, Inc. and IES Management ROO, LP, datedas of March 31, 2016, to Sublease Agreement between Tontine Associates, L.L.C., and IES Shared Services, Inc., datedMarch 29, 2012. (Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filedMay 9, 2016)10.19 —Second Amendment, dated as of May 1, 2019, to Sublease Agreement, dated as of March 29, 2012 and amended as ofMarch 31, 2016, between Tontine Associates, L.L.C. and IES Management ROO, LP (Incorporated by reference toExhibit 10.12 to the Company's Quarterly Report on Form 10-Q filed May 6, 2019)10.20 —Third Amendment, dated as of November 5, 2019, to Sublease Agreement, dated as of March 29, 2012 and amended asof March 31, 2016 and May 1, 2019, between Tontine Associates, L.L.C. and IES Management ROO, LP (an exhibit tothis agreement has been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of the omitted exhibit will befurnished to the SEC upon request.) (1)10.21 —Board Observer Letter Agreement between Tontine Associates, L.L.C. and IES Holdings, Inc., dated December 6, 2018(Incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K filed December 7, 2018)*10.22 —Term Life Insurance Plan (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-Kfiled October 17, 2007)*10.23 —Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) 2006 Equity Incentive Plan, as amended and restatedthrough 2007 (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed October17, 2007)*10.24 —Form of Performance-Based Phantom Stock Unit Award Agreement under the Company’s 2006 Equity Incentive Plan,as amended and restated through 2007 (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report onForm 10-Q filed February 8, 2016)*10.25 —Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) Amended and Restated 2006 Equity Incentive Plan (as ofFebruary 9, 2016) (Incorporated by reference to Exhibit A to the Company’s Definitive Proxy Statement filedDecember 28, 2015)*10.26 —Form of Phantom Stock Unit Award under the Company’s Amended and Restated 2006 Equity Incentive Plan (as ofFebruary 9, 2016) (Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filedMay 9, 2016)*10.27 —Form of Stock Option Award Agreement under the Company’s Amended and Restated 2006 Equity Incentive Plan (asof February 9, 2016) (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filedMay 9, 2016)*10.28 —Form of Restricted Stock Award Agreement under the Company’s Amended and Restated 2006 Equity Incentive Plan(as of February 9, 2016) (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Qfiled May 9, 2016)*10.29 —Performance-Based Phantom Stock Unit Award Agreement, dated as of June 6, 2016, by and between the Company andMr. Santoni, under the Company’s Amended and Restated 2006 Equity Incentive Plan (as of February 9, 2016)(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 7, 2016)*10.30 —Performance-Based Phantom Cash Unit Award Agreement, dated as of June 6, 2016, by and between the Company andMr. Santoni, under the Company’s Amended and Restated 2006 Equity Incentive Plan (as of February 9, 2016)(Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 7, 2016)*10.31 —Amended and Restated 2009 Deferred Compensation Plan (Incorporated by reference to Exhibit 10.34 to theCompany’s Annual Report on Form 10-K filed December 15, 2008)*10.32 —Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) Long Term Incentive Plan, as amended and restated.(Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 23, 2009)75 *10.33 —Amended and Restated Integrated Electrical Services, Inc. (n/k/a IES Holdings, Inc.) Executive Severance Benefit Plan,effective January 12, 2016 (Incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-Kfiled December 9, 2016)*10.34 —Form of Phantom Stock Unit Award under the Company’s Amended and Restated 2006 Equity Incentive Plan (as ofFebruary 9, 2016), dated February 6, 2019 (Incorporated by reference to Exhibit 10.2 to the Company’s QuarterlyReport on Form 10-Q filed May 6, 2019)*10.35 —IES Holdings, Inc. Short-Term Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K filed March, 5, 2019)*10.36 —IES Holdings, Inc. Long-Term Incentive Plan Annual Grant Program (Incorporated by reference to Exhibit 10.2 to theCompany’s Current Report on Form 8-K filed March, 5, 2019)*10.37 —Form of Cumulative Income Restricted Stock Award Agreement under the Company’s 2006 Equity Incentive Plan (asof February 9, 2016), dated March 4, 2019 (Incorporated by reference to Exhibit 10.5 to the Company’s QuarterlyReport on Form 10-Q filed May 6, 2019)*10.38 —Time-Based Restricted Stock Award Agreement, dated as of March 4, 2019, by and between IES Holdings, Inc. andGary S. Matthews, under the Company’s Amended and Restated 2006 Equity Incentive Plan (as of February 9, 2016)(Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2019)*10.39 —First Stock Price-Based Restricted Stock Award Agreement, dated as of March 4, 2019, by and between IES Holdings,Inc. and Gary S. Matthews, under the Company’s Amended and Restated 2006 Equity Incentive Plan (as of February 9,2016) (Incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2019)*10.40 —Second Stock Price-Based Restricted Stock Award Agreement, dated as of March 4, 2019, by and between IESHoldings, Inc. and Gary S. Matthews, under the Company’s Amended and Restated 2006 Equity Incentive Plan (as ofFebruary 9, 2016) (Incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filedMay 6, 2019)*10.41 —Employment Agreement between IES Holdings, Inc. and Gary S. Matthews, dated as of February 28, 2019(Incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2019)*10.42 —Transition Agreement and Release between IES Holdings, Inc. and Robert W. Lewey, dated as of March 9, 2019(Incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2019)*10.43 —Consulting Fee Agreement between IES Holdings, Inc. and Robert W. Lewey, dated as of March 9, 2019 (Incorporatedby reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed May 6, 2019)21.1 —Subsidiaries of the Registrant (1)23.1 —Consent of Ernst & Young LLP (1)31.1 —Rule 13a-14(a)/15d-14(a) Certification of Gary S. Matthews, Chief Executive Officer (1)31.2 —Rule 13a-14(a)/15d-14(a) Certification of Tracy A. McLauchlin, Chief Financial Officer (1)32.1 —Section 1350 Certification of Gary S. Matthews, Chief Executive Officer (2)32.2 —Section 1350 Certification of Tracy A. McLauchlin, Chief Financial Officer (2)101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRLtags are embedded within the Inline XBRL document (1)101.SCHInline XBRL Schema Document (1)101.LABInline XBRL Label Linkbase Document (1)101.PREInline XBRL Presentation Linkbase Document (1)101.DEFInline XBRL Definition Linkbase Document (1)101.CALInline XBRL Calculation Linkbase Document (1)104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data Filebecause its XBRL tags are embedded within the Inline XBRL document *Management contracts or compensatory plans or arrangements required to be filed herewith pursuant to Item 15(a)(3) ofthis Annual Report on Form 10-K.(1)Filed herewith.(2)Furnished herewith.76 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized, on December 6, 2019.IES HOLDINGS, INC. By:/s/ Gary S. MatthewsGary S. MatthewsChief Executive Officer and DirectorPOWER OF ATTORNEYKNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of IES HOLDINGS, INC. hereby constitutes and appoints Gary S.Matthews and Tracy A. McLauchlin, and each of them individually, as his true and lawful attorneys-in-fact and agents, with full power of substitution, for him andon his behalf and in his name, place and stead, in any and all capacities, to sign, execute and file any or all amendments to this report, with any and all exhibitsthereto, and all other documents required to be filed therewith, with the Securities and Exchange Commission or any regulatory authority, granting unto each suchattorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises inorder to effectuate the same, as fully to all intents and purposes as he himself might or could do, if personally present, hereby ratifying and confirming all that saidattorneys-in-fact and agents, or either of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and inthe capacities and on the dates indicated. Signature TitleDate /s/ Gary S. Matthews Chief Executive Officer and DirectorDecember 6, 2019Gary S. Matthews (Principal Executive Officer) /s/ Tracy A. McLauchlin Senior Vice President, Chief Financial Officer and TreasurerDecember 6, 2019Tracy A. McLauchlin (Principal Financial Officer) (Principal Accounting Officer) /s/ Todd M. Cleveland DirectorDecember 6, 2019Todd M. Cleveland /s/ Joseph L. Dowling III DirectorDecember 6, 2019Joseph L. Dowling III /s/ David B. Gendell DirectorDecember 6, 2019David B. Gendell /s/ Jeffrey L. Gendell Director and Chairman of the BoardDecember 6, 2019Jeffrey L. Gendell /s/ Joe D. Koshkin DirectorDecember 6, 2019Joe D. Koshkin /s/ Donald L. Luke DirectorDecember 6, 2019Donald L. Luke 77 Exhibit 10.20THIRD AMENDMENT TO SUBLEASE AGREEMENTThis Third Amendment to Sublease Agreement is entered into as of November 5, 2019 (the “Sublease Amendment”), by and between TONTINEASSOCIATES, LLC, having an office at One Sound Shore Drive, Suite 304, Greenwich, Connecticut 06830 (the “Sublessor”), and IES MANAGEMENTROO, LP, sharing office space with Sublessor (the “Sublessee” and, together with the Sublessor, the “Parties”).RECITALSWHEREAS, the Sublessor and IES SHARED SERVICES, INC. (the “Original Sublessee”), are parties to a Sublease dated March 29, 2012 (“OriginalSublease”), for a portion of the premises (the “Subleased Premises”) located at One Sound Shore Drive, Suite 304, Greenwich, Connecticut 06830 (the “LeasePremises”), which is leased by Sublessor from Sound Shore Partners LLC pursuant to a Lease Agreement (the “Lease Agreement”);WHEREAS, the Original Sublease expired on March 31, 2016 and (i) was amended by that certain First Amendment to the Original Sublease dated April 1,2016 between the Sublessor, Original Sublessee and Sublessee (the “First Amendment”), pursuant to which the Original Sublease was novated with respect to theOriginal Sublessee, and the Sublessee was substituted in place of the Original Sublessee under the Sublease, and the lease term was extended to June 30, 2019, and(ii) was further amended by that certain Second Amendment to the Original Sublease dated May 1, 2019 (the “Second Amendment” and, together with the FirstAmendment and the Original Sublease, the “Sublease”), pursuant to which, the lease term was further extended to December 31, 2019;WHEREAS, Sublessor has renewed its Lease Agreement for the Lease Premises effective January 1, 2020 for a term expiring on February 28, 2023, andWHEREAS, the Parties desire to amend the Sublease, effective as of January 1, 2020 (the “Effective Date”), as set forth below to extend the term of theSublease and to reflect the new lease rates therein of the Subleased Premises.NOW THEREFORE, in consideration for the mutual and reciprocal promises contained herein and for other good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged, the Parties hereby agree to amend the Sublease as follows:All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Sublease.1.Term. The Term of the Sublease shall be extended for three (3) years and two (2) months so that the Sublease Expiration Date shall be February 27,2023.2.Base Rent. As of the Effective Date, the first paragraph of Section 2.1 of the Sublease is hereby deleted and the following is inserted in its place:(a) Base Rent. As of the Effective Date and continuing thereafter on the first day of each and every calendar month during the term of this Sublease,Sublessee shall pay to Sublessor, as base rent for the Subleased Premises, monthly rent (exclusive of any Additional Rent pursuant to and in accordance withArticle 2.2 of the Original Sublease) (the “Base Rent”) for each calendar month or portion thereof during the Term of this Sublease as follows:PeriodAnnual Base Rent*Monthly Installment*from January 1, 2020 through and including December 31,2020;$96,862.50$8,071.88from January 1, 2021 through and including December 31,2021;$99,076.50$8,256.38from January 1, 2022 through and including the SubleaseExpiration Date.$101,290.50$8,440.88* See Exhibit B for a reconciliation of these amounts to amounts payable by Sublessor under renewed Lease Agreement.(b) Additional Rent. Sublessee shall continue to pay the Additional Rent due and owing under the Sublease pursuant to and in accordance with Article 2.2of the Original Sublease. 3.Rental Credit: Notwithstanding the terms of Section 2(a), and provided that Sublessee is not in default under this Sublease, Sublessee shall receive arental credit in the amount of $11,346.75 (the “Credit”), which Sublessee shall apply in one (1) installment of $8,071.88 to pay in part the Base Rent for the firstmonth following the Effective Date (i.e., January 2020) and one (1) installment of $3,274.87 to pay in part the Base Rent for the second month following theEffective Date (i.e., February 2020). The Credit shall abate during any period of a default by Sublessee. In the event Sublessee is in default at any time during thisSublease, any Credit provided shall be negated and recoverable by Sublessor and may be sued for in a non-payment proceeding.4.Sublessor Representations and Warranties.(a) Sublessor hereby represents and warrants to Sublessee the following:(i)attached hereto, marked Exhibit A is a true, complete, and correct copy of the Prime Lease;(ii)the Prime Lease is in full force and effect and has not been amended or modified except as expressly set forth in Exhibit A; 5.This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constituteone and the same instrument.6.All other terms and conditions of the Sublease shall remain the same and in full force and effect.SIGNATURE PAGE FOLLOWS IN WITNESS WHEREOF, Sublessor and Sublessee have duly executed this Third Amendment as of the day and year first above written.SUBLESSOR:TONTINE ASSOCIATES, L.L.C., a Delaware limited liability companyBy: /s/ Jeffrey L. GendellName: Jeffrey L. GendellTitle: Managing MemberSUBLESSEE:IES MANAGEMENT ROO, L.P., a Texas limited partnershipBy: IES OPERATIONS GROUP, INC., its General PartnerBy: /s/ Tracy A. McLauchlinName: Tracy A. McLauchlinTitle: President and Treasurer Exhibit ATontine 2019 Prime Lease RenewalOmitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of the omitted exhibit will be furnished to the SEC upon request.Exhibit BReconciliation of Amounts Payable by Sublessor Under Lease Renewal and Amounts Payable by Sublessee Under Third Amendment to SubleaseAgreement 1/1/20-12/31/20 1/1/21-12/31/21 1/1/22-2/28/23Aggregate Square Footage3,690 3,690 3,690Sublessee Share of Square Footage60% 60% 60%Sublessee Square Footage2,214 2,214 2,214 Annual Fixed Rent Payable by Sublessor before Rent Inclusion Factor$151,290.00 $ 154,980.00 $ 158,670.00Annual Rent Inclusion Factor10,147.50 10,147.50 10,147.50Annual Fixed Rent Payable by Sublessor including Rent Inclusion Factor $ 161,437.50 $ 165,127.50 $ 168,817.50Annual Fixed Rent per Square Foot Payable by Sublessor including Rent InclusionFactor$43.75 $44.75 $45.75 Sublessee’s % Share of Annual Fixed Rent Payable by Sublessor including RentInclusion Factor 60% 60% 60%Sublessee’s Annual Base Rent Payable under Sublease $ 96,862.50 $ 99,076.50 $ 101,290.50Sublessee’s Annual Base Rent per Square Foot Payable under Sublease$43.75 $44.75 $45.75 Monthly Fixed Rent Payable by Sublessor before Rent Inclusion Factor $ 12,607.50 $ 12,915.00 $ 13,222.50Monthly Rent Inclusion Factor845.63 845.63 845.63Monthly Fixed Rent Payable by Sublessor including Rent Inclusion Factor $ 13,453.13 $ 13,760.63 $ 14,068.13Monthly Fixed Rent per Square Foot Payable by Sublessor including Rent InclusionFactor$3.65 $3.73 $3.81 Sublessee’s % Share of Monthly Fixed Rent Payable by Sublessor including RentInclusion Factor60% 60% 60%Sublessee’s Monthly Base Rent Payable under Sublease $ 8,071.88 $ 8,256.38 $ 8,440.88Sublessee’s Monthly Base Rent per Square Foot Payable under Sublease$3.65 $3.73 $3.81______________________Note: “Rent Inclusion Factor” is that part of the Fixed Rent payable by Sublessor under Lease Agreement allocable to the provision of electrical energy. In theoriginal Lease Agreement and first three amendments thereto, the Fixed Rent was stated on a basis including the Rent Inclusion Factor. In the current amendmentto the Lease Agreement, the Fixed Rent is stated on a basis before the Rent Inclusion Factor, with the Rent Inclusion Factor identified separately. In the OriginalSublease and prior amendments, Sublessee’s Base Rent is based on a certain percentage of Sublessor’s Fixed Rent including the Rent Inclusion Factor. In thisThird Amendment to Sublease Agreement, Sublessee’s share of the Fixed Rent is stated as a percentage of the Fixed Rent including the Rent Inclusion Factor,consistent with the Original Sublease and prior amendments. Exhibit 21.1SUBSIDIARIES OF THE REGISTRANTAs of September 30, 2019 Subsidiary Jurisdiction of Incorporation Azimuth Communications, Inc. OregonCalumet Armature and Electric, L.L.C. IllinoisFreeman Enclosure Systems, LLC OhioHK Engine Components, LLC IndianaICS Holdings LLC ArizonaIES Commercial, Inc. DelawareIES Communications, LLC DelawareIES Consolidation, LLC DelawareIES Infrastructure Solutions, LLC DelawareIES Management, LP TexasIES Management ROO, LP TexasIES Operations Group, Inc. DelawareIES Residential, Inc. DelawareIES Shared Services, Inc. DelawareIES Subsidiary Holdings, Inc. DelawareIntegrated Electrical Finance, Inc. DelawareKey Electrical Supply, Inc. TexasMagnetech Industrial Services, Inc. IndianaNEXT Electric, LLC WisconsinSouthern Industrial Sales and Services, Inc. GeorgiaSTR Mechanical, LLC North CarolinaTechnibus, Inc. DelawareTechnical Services II, LLC VirginiaThomas Popp & Company Ohio Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement on Form S-8 (No. 333-209483) pertaining to the Amended and Restated 2006 Equity Incentive Plan of IES Holdings,Inc.;(2)Registration Statement on Form S-8 (No. 333-134100) pertaining to the 2006 Equity Incentive Plan of IES Holdings,Inc.;(3)Registration Statement on Form S-3 (No. 333-186786) pertaining to the registration for resale of common stock of IES Holdings, Inc. by the sellingstockholders named therein; and(4)Registration Statement on Form S-3 (No. 333-215071) pertaining to the registration for resale of common stock of IES Holdings, Inc. by the sellingstockholders named therein;of our reports dated December 6, 2019, with respect to the consolidated financial statements of IES Holdings, Inc. and subsidiaries and the effectiveness of internalcontrol over financial reporting of IES Holdings, Inc. and subsidiaries, included in this Annual Report (Form 10-K) of IES Holdings, Inc. and subsidiaries for theyear ended September 30, 2019.s/ ERNST & YOUNG LLPHouston, TexasDecember 6, 2019 Exhibit 31.1CERTIFICATIONI, Gary S. Matthews, certify that: 1. I have reviewed this Annual Report on Form 10-K of IES Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant andhave: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withaccounting principles generally accepted in the United States of America; (c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscalquarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theRegistrant’s internal control over financial reporting; and 5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the Registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control overfinancial reporting.Date: December 6, 2019 /s/ GARY S. MATTHEWS Gary S. Matthews Chief Executive Officeras Principal Executive Officer Exhibit 31.2CERTIFICATIONI, Tracy A. McLauchlin, certify that: 1. I have reviewed this Annual Report on Form 10-K of IES Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant andhave: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withaccounting principles generally accepted in the United States of America; (c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscalquarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theRegistrant’s internal control over financial reporting; and 5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the Registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control overfinancial reporting.Date: December 6, 2019 /s/ TRACY A. MCLAUCHLIN Tracy A. McLauchlin Senior Vice President, Chief Financial Officer and Treasureras Principal Financial Officer Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with this Annual Report of IES Holdings, Inc. (the “Company”) on Form 10-K for the period ending September 30, 2019 (the “Report”), I, Gary S.Matthews, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date:December 6, 2019By:/s/ GARY S. MATTHEWS Gary S. Matthews Chief Executive Officeras Principal Executive Officer Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with this Annual Report of IES Holdings, Inc. (the “Company”) on Form 10-K for the period ending September 30, 2019 (the “Report”), I, Tracy A.McLauchlin, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 ofthe Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date:December 6, 2019By:/s/ TRACY A. MCLAUCHLIN Tracy A. McLauchlin Senior Vice President, Chief Financial Officer and Treasureras Principal Financial Officer
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