Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration is composed of earn-outs, which represent the estimated fair value of future amounts payable for businesses, which the Company refers to as “Earn-outs,” that are contingent upon the acquired businesses achieving certain levels of earnings in the future. As of December 31, 2024 and 2023, the estimated fair value of the Company’s Earn-out liabilities totaled $112.7 million and $77.4 million, respectively. Earn-out liabilities included within other current liabilities totaled approximately $70.0 million and $29.8 million as of December 31, 2024 and 2023, respectively. The fair values of the Company’s Earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models, both of which incorporate significant inputs not observable in the market (Level 3 inputs), including management’s estimates and entity-specific assumptions, and are evaluated on an ongoing basis. Key assumptions include the discount rate, which, as of December 31, 2024, ranged from 14.0% to 14.5%, with a weighted average rate of 14.2% based on the relative fair value of the respective Earn-out liabilities, and probability-weighted projections of EBITDA. Significant changes in any of these assumptions could result in significantly higher or lower estimated Earn-out liabilities. The ultimate payment amounts for the Company’s Earn-out liabilities will be determined based on the actual results achieved by the acquired businesses. As of December 31, 2024, the range of potential undiscounted Earn-out liabilities was estimated to be between $21 million and $138 million; however, there is no maximum payment amount.

Earn-out activity consists primarily of additions from new business combinations; changes in the expected fair value of future payment obligations; and payments. For the years ended December 31, 2024, 2023 and 2022, additions from new business combinations totaled approximately $56.1 million, $1.4 million and $2.8 million, respectively. There were no measurement period adjustments in either of the years ended December 31, 2024 or 2023, and for the year ended December 31, 2022, measurement period adjustments totaled an increase, net, of approximately $3.3 million and related to a net increase in the Company’s Pipeline Infrastructure segment, partially offset by a decrease in its Communications segment. For the year ended December 31, 2024, fair value adjustments totaled an increase, net, of approximately $5.2 million and related to increases within the Company’s Clean Energy and Infrastructure, Power Delivery and Pipeline Infrastructure segments, which were partially offset by decreases related to acquisitions within the Company’s Communications segment. Fair value adjustments totaled a decrease, net, of approximately $12.6 million for the year ended December 31, 2023, and related to a net decrease in the Company’s Communications segment, partially offset by net increases, primarily within the Company’s Clean Energy and Infrastructure and Power Delivery segments. The decrease in the Communications segment for the year ended December 31, 2023 included a reduction of approximately $12.3 million related to mandatorily redeemable non-controlling interests. In 2023, the Company acquired the remaining interests of an entity with which it had a mandatorily redeemable non-controlling interest arrangement. For the year ended December 31, 2022, fair value adjustments totaled a decrease, net, of approximately $1.2 million and related primarily to the Company’s Communications segment. For the years ended December 31, 2024, 2023 and 2022, Earn-out payments totaled approximately $26.1 million, $38.8 million and $37.8 million, respectively, including approximately $1.7 million related to mandatorily redeemable non-controlling interests during 2023.

Equity Investments

The Company’s equity investments as of December 31, 2024 include: (i) the Company’s 33% equity interests in Trans-Pecos Pipeline, LLC (“TPP”) and Comanche Trail Pipeline, LLC (“CTP,” and together with TPP, the “Waha JVs”); (ii) a 15% equity interest in Cross Country Infrastructure Services, Inc. (“CCI”); (iii) the Company’s 50% equity interests in each of FM Technology Holdings, LLC, FM USA Holdings, LLC and All Communications Solutions Holdings, LLC, collectively “FM Tech”; (iv) the Company’s interests in certain proportionately consolidated non-controlled contractual joint ventures; and (v) certain other equity investments.

As of December 31, 2024 and 2023, the aggregate carrying value of the Company’s equity investments totaled approximately $330 million and $319 million, respectively. As of both December 31, 2024 and 2023, equity investments measured on an adjusted cost basis, including the Company’s $15 million investment in CCI, totaled approximately $18 million. Except for one investment for which the Company recorded an impairment loss totaling approximately $3 million in the third quarter of 2023, there were no impairments related to these investments in any of the years ended December 31, 2024, 2023 or 2022.

The Waha JVs. The Waha JVs own and operate certain pipeline infrastructure that transports natural gas to the Mexican border for export. The Company’s investments in the Waha JVs are accounted for as equity method investments. Equity in earnings related to the Company’s proportionate share of income from the Waha JVs, which is included within the Company’s Other segment, totaled approximately $30.8 million, $30.3 million and $30.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Distributions of earnings from the Waha JVs, which are included within operating cash flows, totaled approximately $18.0 million, $15.4 million and $14.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. Cumulative undistributed earnings from the Waha JVs, which represents cumulative equity in earnings for the Waha JVs less distributions of earnings, totaled $138.3 million as of December 31, 2024. The Company’s net investment in the Waha JVs, which differs from its proportionate share of the net assets of the Waha JVs due primarily to equity method goodwill associated with capitalized investment costs, totaled approximately $287 million and $274 million as of December 31, 2024 and 2023, respectively.

The Waha JVs are party to separate non-recourse financing facilities, each of which are secured by pledges of the equity interests in the respective entities, as well as a first lien security interest over virtually all of their assets. The Waha JVs are also party to certain interest rate swaps (the “Waha JV swaps”), which are accounted for as qualifying cash flow hedges. The Company reflects its proportionate share of any unrealized fair market value gains or losses from fluctuations in interest rates associated with these swaps within other comprehensive income or loss, as appropriate. For the years ended December 31, 2024 and 2022, the Company’s proportionate share of unrecognized unrealized activity on the Waha JV swaps totaled gains of approximately $0.5 million and $41.0 million, respectively, or $0.3 million and $30.9 million, net of tax, respectively, and for the year ended December 31, 2023, such activity totaled losses of approximately $5.0 million, or $3.7 million, net of tax.

Other Investments. The Company has equity interests in certain other entities that are accounted for as equity method investments. As of December 31, 2024 and 2023, the Company had an investment of approximately $17 million and $18 million, respectively, in FM Tech, which provides for additional funding upon the resolution of certain contingencies, which could range up to $7 million as of December 31, 2024. The fair

value of the remaining contingent payments for FM Tech, which are included within other current liabilities, was estimated to be $3 million as of both December 31, 2024 and 2023. For the years ended December 31, 2024, 2023 and 2022, the Company made equity contributions of approximately $0.4 million, $0.2 million and $1.3 million, respectively, to these other entities. For the year ended December 31, 2024, distributions from these entities totaled approximately $1.9 million, and for both the years ended December 31, 2023 and 2022, there were no distributions from these entities. The Company has subcontracting arrangements with certain of these entities for the performance of construction services, and expenses recognized in connection with these arrangements totaled approximately $5.4 million, $2.7 million and $14.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024 and 2023, related amounts payable to these entities totaled approximately $0.3 million and $0.1 million, respectively. In addition, the Company has advanced amounts to certain of these entities, which for the years ended December 31, 2024, 2023 and 2022, totaled approximately $0.1 million, $0.7 million and $3.3 million, respectively. As of December 31, 2024 and 2023, receivables related to these arrangements totaled approximately $4.1 million and $4.0 million, respectively.

Variable Interest Entities. The Company has determined that certain of its investment arrangements are VIEs. See Note 1 - Business, Basis of Presentation and Significant Accounting Policies for additional information. As of December 31, 2024, management determined that the Company is the primary beneficiary of two of its VIEs, and accordingly, has consolidated these entities within the Company’s financial statements, with the other parties’ interests accounted for as non-controlling interests.

The Company’s consolidated VIEs include an electric utility contractor in which the Company acquired a 49% interest in the first quarter of 2024. As of December 31, 2024 and 2023, the carrying values of assets associated with the Company’s consolidated VIEs totaled approximately $134.8 million and $1.7 million, respectively, which amounts consisted primarily of accounts receivable, net of allowance and contract assets. The carrying values of liabilities associated with the Company’s consolidated VIEs totaled approximately $132.8 million and $1.6 million as of December 31, 2024 and 2023, respectively, which amounts consisted primarily of accounts payable. The Company has not provided, nor is it obligated to provide, any financial support to any of its consolidated VIEs.

The carrying values of the Company’s VIEs that are not consolidated totaled approximately $23 million as of both December 31, 2024 and 2023, which amounts are recorded within other long-term assets in the consolidated balance sheets. Management believes that the Company’s maximum exposure to loss for its non-consolidated VIEs, inclusive of additional financing commitments, approximated $34 million and $35 million as of December 31, 2024 and 2023, respectively.

Senior Notes

In the first quarter of 2024, management reevaluated its fair value hierarchy determination for its senior notes to better align with the valuation hierarchy of the fair value guidance, which resulted in an update of the Level determination from Level 1 inputs to Level 2 inputs. The update had no effect on the reported fair values of the related senior notes. As of December 31, 2024, the estimated fair values of the Company’s senior notes were determined based on an exit price approach using Level 2 inputs. See Note 7 - Debt for additional information pertaining to the Company’s senior notes.