Operating Segments

To more clearly communicate the Company's capabilities and focus to the marketplace, beginning in fiscal 2017, the Company renamed its Energy segment “Power” and its Pipeline Services segment “Oil and Gas.” The Company manages its business under the following four operating segments:

Power (formerly Energy): The Power operating segment provides services to a range of clients including energy companies, power utilities, other commercial entities, and state and federal government entities. The Company's services include program management, engineer/procure/construct projects, design, and consulting. The Company's typical projects involve upgrades, design and new construction for electric transmission and distribution systems and substations; energy efficiency program design and management; security assessments; and renewable energy development and power generation.

Environmental: The Environmental operating segment provides services to a wide range of clients including industrial, transportation, energy and natural resource companies, as well as federal, state and municipal agencies. The Environmental operating segment is organized to focus on key areas of demand including: environmental management of buildings and facilities; air quality measurements and modeling of potential air pollution impacts; water quality and water resource management; assessment and remediation of contaminated sites and buildings; hazardous waste management; construction monitoring, inspection and management; environmental, health and safety management and sustainability advisory services; compliance auditing and strategic due diligence; environmental licensing and permitting of a wide variety of projects; and natural and cultural resource assessment, protection and management.

Infrastructure: The Infrastructure operating segment provides services related to the expansion of infrastructure capacity and the rehabilitation of overburdened and deteriorating infrastructure systems. The Company's client base is predominantly state and municipal governments as well as select commercial developers. In addition, the Company provides infrastructure services on projects originating in its other operating segments. Primary services include: roadway, bridge and related surface transportation design; structural design and inspection of bridges; program management; construction engineering inspection and construction management for roads and bridges; civil engineering for municipalities and public works departments; geotechnical engineering services; and, design and construction management.

Oil & Gas (formerly Pipeline Services): Acquired in November 2015, the Oil & Gas operating segment provides pipeline and facilities engineering; engineer, procure, and construct ("EPC") services; engineer, procure, construct and management ("EPCm") services; field services and integrity services to the oil and gas transmission and midstream markets, as well as at government facilities. The Company specializes in providing engineering services to assist clients in designing, engineering and constructing or expanding pipeline systems, compressor stations, pump stations, fuel storage facilities, terminals, and field gathering and production facilities. The Company's expertise extends to the engineering of a wide range of project peripherals, including various types of support buildings and utility systems, power generation and electrical transmission systems, communications systems, fire protection, water and sewage treatment, water transmission, roads and railroad sidings. The Company also provides project management, engineering and material procurement services to the refining industry and government agencies, including mechanical, civil, structural, electrical instrumentation/controls and environmental engineering. The Company provides full-service integrity management program offerings including program development, data services, risk analysis, corrosion evaluation, and integrity engineering. The Company is partnered with Google to provide a cloud-based pipeline life-cycle integrity management solution, Integra Link™, which utilizes Google’s geospatial technology platform to help oil and gas pipeline companies visualize and utilize their data and information.

The Company's chief operating decision maker ("CODM") is its CEO. The Company's CEO manages the business by evaluating the financial results of the four operating segments focusing primarily on segment revenue and segment profit. The Company utilizes segment revenue and segment profit because it believes they provide useful information for effectively allocating resources among operating segments; evaluating the health of its operating segments based on metrics that management can actively influence; and gauging its investments and its ability to service, incur or pay down debt. Specifically, the Company's CEO evaluates segment revenue and segment profit and assesses the performance of each operating segment based on these measures, as well as, among other things, the prospects of each of the operating segments and how they fit into the Company's overall strategy. The Company's CEO then decides how resources should be allocated among its operating segments. The Company does not track its assets by operating segment, and consequently, it is not practical to show assets by operating segment. Segment profit includes all operating expenses except the following: costs associated with providing corporate shared services (including certain depreciation and amortization), goodwill and intangible asset write-offs, and stock-based compensation expense. Depreciation expense is primarily allocated to operating segments based upon their respective use of total operating segment office space. Assets solely used at the Corporate level are not allocated to the operating segments. Inter-segment balances and transactions are not material. The accounting policies of the operating segments are the same as those for the Company as a whole, except as discussed herein.

On July 1, 2016 the Company made certain changes to its management reporting structure which resulted in a change to the composition of the Infrastructure operating segment. Certain corporate employees were transferred to the Infrastructure operating segment. As a result, beginning in fiscal year 2017 the Company reports its financial performance based on the current reporting structure. The Company has recast certain prior period amounts to conform to the way it internally manages and monitors segment performance. These changes had no impact on consolidated net income or cash flows and were not material to the segment measurements presented.

The following tables present summarized financial information for the Company's operating segments (for the periods noted below):



	Power		Environmental		Infrastructure		Oil & Gas			Total

Three months ended March 31, 2017:
Gross revenue	$	69,074	$	73,557	$	18,518	$	27,828		$	188,977
Net service revenue	41,282		49,855		14,673		22,280			128,090
Segment profit	9,110		8,651		3,202		2,045			23,008
Depreciation	435		628		141		300			1,504
Amortization	608		237		—		1,842			2,687

Three months ended March 25, 2016:
Gross revenue	$	46,280	$	65,465	$	18,721	$	26,526		$	156,992
Net service revenue	35,974		50,023		13,036		21,560			120,593
Segment profit (loss)	8,049		7,922		2,536		(3,128		)	15,379
Acquisition and integration expense	—		—		—		1,171			1,171
Depreciation	473		615		119		519			1,726
Amortization	260		279		—		2,454			2,993




	Power		Environmental		Infrastructure		Oil & Gas			Total

Nine months ended March 31, 2017:
Gross revenue	$	193,929	$	227,655	$	62,873	$	81,949		$	566,406
Net service revenue	118,670		149,074		45,922		64,951			378,617
Segment profit	26,578		26,887		10,984		4,883			69,332
Depreciation	1,316		1,929		418		963			4,626
Amortization	1,101		765		—		5,901			7,767

Nine months ended March 25, 2016:
Gross revenue	$	133,556	$	219,233	$	60,998	$	34,543		$	448,330
Net service revenue	110,106		153,011		40,308		27,546			330,971
Segment profit (loss)	24,831		27,451		7,961		(4,289		)	55,954
Acquisition and integration expense	—		—		—		1,171			1,171
Depreciation	1,431		1,877		341		786			4,435
Amortization	858		944		—		2,756			4,558



	Three Months Ended						Nine Months Ended
Gross revenue	March 31, 2017			March 25, 2016			March 31, 2017			March 25, 2016
Gross revenue from reportable operating segments	$	188,977		$	156,992		$	566,406		$	448,330
Reconciling items ⁽¹⁾	747			1,138			2,831			3,002
Total consolidated gross revenue	$	189,724		$	158,130		$	569,237		$	451,332

Net service revenue
Net service revenue from reportable operating segments	$	128,090		$	120,593		$	378,617		$	330,971
Reconciling items ⁽¹⁾	635			660			1,769			1,827
Total consolidated net service revenue	$	128,725		$	121,253		$	380,386		$	332,798

Income (loss) from operations before taxes
Segment profit from reportable operating segments	$	23,008		$	15,379		$	69,332		$	55,954
Corporate shared services ⁽²⁾	(13,889		)	(11,898		)	(42,804		)	(32,434		)
Goodwill impairment	—			(24,465		)	—			(24,465		)
Stock-based compensation expense	(1,786		)	(1,498		)	(5,529		)	(4,278		)
Unallocated acquisition and integration expenses	—			(435		)	—			(2,553		)
Unallocated depreciation and amortization	(323		)	(385		)	(996		)	(1,155		)
Interest income	391			189			955			326
Interest expense	(1,201		)	(1,073		)	(2,887		)	(1,562		)
Total consolidated income (loss) from operations before taxes	$	6,200		$	(24,186	)	$	18,071		$	(10,167	)

Acquisition and integration expenses
Acquisition and integration expenses from reportable operating segments	$	—		$	1,171		$	—		$	1,171
Unallocated acquisition and integration expenses	—			435			—			2,553
Total consolidated acquisition and integration expenses	$	—		$	1,606		$	—		$	3,724

Depreciation and amortization
Depreciation and amortization from reportable operating segments	$	4,191		$	4,719		$	12,393		$	8,993
Unallocated depreciation and amortization	323			385			996			1,155
Total consolidated depreciation and amortization	$	4,514		$	5,104		$	13,389		$	10,148


⁽¹⁾	Amounts represent certain unallocated corporate amounts not considered in the CODM's evaluation of operating segment performance.


⁽²⁾	Corporate shared services consist of centrally managed functions in the following areas: accounting, treasury, information technology, legal, human resources, marketing, internal audit and executive management such as the CEO and various executives. These costs and other items of a general corporate nature are not allocated to the Company’s four operating segments.