COMMITMENTS

12 Months Ended

Jan. 31, 2024

COMMITMENTS

COMMITMENTS

NOTE 9 – COMMITMENTS

Leases

The Company’s leases are primarily operating leases that cover office space, expiring on various dates through December 2031, and certain equipment used by the Company in the performance of its construction services contracts. Some of these equipment leases may be embedded in broader agreements with subcontractors or construction equipment suppliers. The Company has no material finance leases. None of the operating leases includes significant amounts for incentives, rent holidays or price escalations.

At January 31, 2024 and 2023, right-of-use assets were $5.3 million and $4.8 million, respectively. Operating lease expense amounts are recorded on a straight-line basis over the expected lease terms. Operating lease expense amounts for Fiscal 2024, Fiscal 2023 and Fiscal 2022 were $1.9 million, $2.6 million and $3.4 million, respectively.

The following is a schedule of future minimum lease payments for the operating leases that were recognized in the consolidated balance sheet as of January 31, 2024 for the years ending January 31:

2025	$	2,823
2026		1,461
2027		275
2028		221
2029		213
Thereafter		625
Total lease payments		5,618
Less imputed interest		300
Present value of lease payments		5,318
Less current portion (included in accrued expenses)		2,726
Noncurrent portion (included in noncurrent liabilities)	$	2,592

The following table presents summary information for the Company’s lease terms and discount rates for its operating leases at January 31, 2024 and 2023:

	2024			2023
Weighted average remaining lease term		41 months			58 months
Weighted average discount rate		5.2	%		3.7	%

The Company also uses equipment and occupies other facilities under short-term rental agreements. Rent expense amounts incurred under short-term rentals were $9.5 million, $11.3 million and $9.6 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.

Performance Bonds and Guarantees

In the normal course of business and for certain major projects, the Company may be required to obtain surety or performance bonding, to cause the issuance of letters of credit, or to provide parent company guarantees (or some combination thereof) in order to provide performance assurances to clients on behalf of its contractor subsidiaries. As these subsidiaries are wholly-owned, any actual liability is ordinarily reflected in the financial statement account balances determined pursuant to the Company’s accounting for contracts with customers. When sufficient information about claims on guaranteed or bonded projects would be available and monetary damages or other costs or losses would be determined to be probable, the Company would record such losses. Any such amounts that may be required to be paid in excess of the estimated costs to complete contracts in progress as of January 31, 2024 are not estimable.

As of January 31, 2024, the estimated amount of the Company’s unsatisfied bonded performance obligations, covering all of its subsidiaries, was approximately $0.5 billion. As of January 31, 2023, the outstanding amount of bonds covering other risks, including warranty obligations related to completed activities, was not material. Not all of our projects require bonding.

The Company also provided a financial guarantee, subject to certain terms and conditions, up to $3.6 million in support of business development efforts. Any estimated loss related to this guarantee was recorded during Fiscal 2022.

Warranties

The Company generally provides assurance-type warranties for work performed under its construction contracts. The warranties cover defects in equipment, materials, design or workmanship, and most warranty periods typically run from nine to twenty-four months after the completion of construction on a particular project. Because of the nature of the Company’s projects, including project owner inspections of the work both during construction and prior to substantial completion, the Company has not experienced material unexpected warranty costs in the past. Warranty costs are estimated based on experience with the type of work and any known risks relative to each completed project. The accruals of liabilities, which are established to cover estimated future warranty costs, are recorded as the contracted work is performed, and they are included in the amounts of accrued expenses in the consolidated balances sheets. The liability amounts may be periodically adjusted to reflect changes in the estimated size and number of expected warranty claims.

Employee Benefit Plans

The Company maintains 401(k) savings plans pursuant to which the Company makes discretionary contributions for the eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were approximately $2.9 million, $2.7 million and $2.3 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. The Company also maintains nonqualified plans whereunder the payments of certain amounts of incentive compensation earned by key employees are deferred for periods of four to seven years; payments are conditioned on continuous employment.