SOLV Energy Inc.

11/12/2026 | Press release | Distributed by Public on 11/12/2026 15:23

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2026, and should be read in conjunction with our unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in this Quarterly Report, including the "Cautionary Note Regarding Forward-Looking Statements," and "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. Our actual results may differ materially from those contained in or implied by these forward-looking statements. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Overview
We are a leading provider of infrastructure services to the power industry, including engineering, procurement, construction, testing, commissioning, operations, maintenance and repowering. We specialize in designing, building and maintaining utility-scale solar and battery storage projects and related T&D infrastructure. Our customers include project developers, independent power producers and utilities. Our new construction projects are typically commence with an LNTP agreement followed by a lump-sum EPC contract. We provide O&M services pursuant to long-term contracts that typically obligate the customer to pay us a fixed fee for operations and routine preventative maintenance and additional fees for corrective maintenance on a time and materials basis.
The historical results of operations discussed in this Quarterly Report are those of Holdings prior to the completion of the Transactions, including the IPO. As a result, the historical consolidated financial data may not give you an accurate indication of what our actual results would have been if the Transactions had been completed at the beginning of the periods presented or of what our future results of operations are likely to be. See "The Transactions" in our Annual Report on Form 10-K for the year ended December 31, 2025 and this Form 10-Q for more information.
Recent Developments
Roberson Waite Acquisition
On July 1, 2026, we completed the previously announced acquisition of 100% of the ownership interests in Roberson Waite Electric ("Roberson Waite") for total consideration of $49.5 million, which consisted of $40.3 million cash consideration paid at closing, customary post-closing adjustments of $0.9 million, and acquisition date fair value of contingent consideration of $8.3 million. The contingent cash consideration is payable in subsequent years, subject to achievement of certain performance criteria. Roberson Waite brings deep, long-standing relationships with major California utilities and specialized expertise in turnkey substation construction and battery storage deployments.
Exchange Transactions
In August 2026, certain Continuing Equity Owners exchanged an aggregate of 7,311,118 LLC Interests, together with an equal number of shares of our Class B common stock, for 7,311,118 shares of our Class A common stock pursuant to the terms of the SOLV Energy Holdings LLC Agreement. As a result of the exchanges, our direct and indirect ownership interest in Holdings increased from 61.1% to 64.8%, and we recognized an incremental deferred tax asset of $55.6 million and an incremental liability under the Tax Receivable Agreement of $50.4 million, the net effect of which was recorded as an adjustment to stockholders' equity.
Factors Affecting Our Performance
Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described under the section entitled "Risk Factors" included elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results of operations in the future. For additional information, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Factors Affecting Our Performance" included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the factors since our Annual Report.
The following table sets forth a summary of our financial highlights for the periods indicated:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Revenue
$ 1,241,793 $ 753,067 $ 2,869,841 $ 1,696,866
Gross profit
$ 220,912 $ 148,201 $ 479,598 $ 320,361
Net income $ 122,747 $ 70,104 $ 162,166 $ 114,234
EBITDA(1)
$ 170,801 $ 105,397 $ 275,704 $ 212,497
Adjusted EBITDA(1)
$ 172,880 $ 121,532 $ 382,876 $ 241,852
(1)EBITDA and Adjusted EBITDA are non-GAAP financial measures. See "Key Performance Indicators and Non-GAAP Financial Measures" below for our definition of, and additional information about, EBITDA and Adjusted EBITDA, and for a reconciliation to net income, the most directly comparable U.S. GAAP financial measure.
Revenue disaggregated by job type
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
New Construction(1)
$ 1,192,775 $ 724,371 $ 2,756,630 $ 1,587,687
Existing Infrastructure(2)
37,752 25,744 90,686 88,653
Other(3)
11,266 2,952 22,525 20,526
Total
$ 1,241,793 $ 753,067 $ 2,869,841 $ 1,696,866
(1)Includes revenue for jobs involving the construction of a new solar, battery storage, T&D or other project pursuant to EPC contracts or LNTP agreements.
(2)Includes revenue from jobs involving maintaining, upgrading, repowering, or repairing existing solar, battery storage, T&D or other projects pursuant to commercial agreements.
(3)Includes development fees from the sale of projects we developed and sold to third parties and SDI small and large diameter drilling projects.
New construction revenue by project type
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Solar PV / Solar PV+BESS $ 1,112,902 $ 653,420 $ 2,542,184 $ 1,440,636
Standalone Battery Storage 12,987 28,157 56,627 67,971
T&D 66,886 42,794 157,819 79,080
Total
$ 1,192,775 $ 724,371 $ 2,756,630 $ 1,587,687
Backlog
For infrastructure services providers, backlog can be an indicator of future revenue. As of September 30, 2026 our Total Backlog was $9.18 billion, which includes all Signed Backlog, Awarded Backlog, and Estimated Corrective Maintenance Backlog.
For a description of backlog categories, our methodology for determining backlog, and differences from remaining performance obligations, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Non-GAAP Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, 2025.
Backlog should not be considered a comprehensive indicator of future revenue, as a percentage of our revenue is derived from change orders and other revenues that are not included in our backlog. Additionally, any of our contracts may be terminated by our customers on relatively short notice and projects can also remain in backlog for extended periods of time as a result of customer delays, permitting or regulatory delays, equipment delays or project specific issues.
Results of Operations
A discussion of our results of operations for the three and nine months ended September 30, 2026 and 2025 is set forth below.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table summarizes our consolidated results of operations for the three months ended September 30, 2026 and 2025, including as a percentage of revenue, as well as the dollar and percentage change from the prior year's three months ended:
Three Months Ended September 30,
Change
(in thousands) 2026 2025 $ %
Revenue $ 1,241,793 100.0 % $ 753,067 100.0 % $ 488,726 64.9 %
Cost of revenue(1)
1,020,881 82.2 % 604,866 80.3 % 416,015 68.8 %
Gross profit 220,912 17.8 % 148,201 19.7 % 72,711 49.1 %
Selling, general and administrative expenses(2) (3)
61,735 5.0 % 50,522 6.7 % 11,213 22.2 %
Amortization expense 17,016 1.4 % 14,879 2.0 % 2,137 14.4 %
Total operating expenses 78,751 6.3 % 65,401 8.7 % 13,350 20.4 %
Operating income 142,161 11.4 % 82,800 11.0 % 59,361 71.7 %
Loss on debt extinguishment - - % - - % - - %
Interest expense 1,742 0.1 % 13,680 1.8 % (11,938) (87.3 %)
Interest income (1,840) (0.1 %) (1,049) (0.1 %) (791) (75.4 %)
Other income, net (1,507) (0.1 %) (468) (0.1 %) (1,039) (222.0 %)
Income before income taxes 143,766 11.6 % 70,637 9.4 % 73,129 103.5 %
Income tax expense 21,019 1.7 % 533 0.1 % 20,486 3843.5 %
Net income 122,747 9.9 % 70,104 9.3 % 52,643 75.1 %
Net income (loss) attributable to non-controlling interests and LLC members prior to IPO 52,856 4.3 % (3) - % 52,859 NM
Net income attributable to SOLV Energy, Inc. $ 69,891 5.6 % $ 70,107 9.3 % $ (216) (0.3 %)
(1)Includes non-cash compensation expense of $(6.2) million and nil for the three months ended September 30, 2026 and 2025, respectively.
(2)Includes non-cash compensation expense of $3.8 million and $0.9 million for the three months ended September 30, 2026 and 2025, respectively.
(3)Includes management fees paid to American Securities that are no longer being incurred following the IPO date, one-time IPO related costs, non-recurring transaction and integration costs inclusive of deferred compensation or earn-out structures to employees of acquired businesses that are not related to normal course compensation and are conditioned on post-closing service obligations, and other non-cash or non-recurring expenses. We recorded management fees, including reimbursable expenses, of nil and $0.8 million for the three months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026, we recorded $5.3 million related to transaction and integration costs, and non-capitalized IPO related costs.
NM - Percentage is not meaningful
Revenue
Revenue increased by $488.7 million to $1,241.8 million for the three months ended September 30, 2026 compared to $753.1 million for the three months ended September 30, 2025, primarily driven by an increase in new construction of $468.4 million, an increase in existing infrastructure of $12.0 million, and an increase in other revenues of $8.3 million, primarily from project development sales.
Cost of revenue
Cost of revenue increased by $416.0 million to $1,020.9 million for the three months ended September 30, 2026 compared to $604.9 million for the three months ended September 30, 2025, in line with the increase in revenues. Gross profit as a percentage of revenue decreased for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 primarily due to project performance including contingency release from later stage projects during the three months ended September 30, 2025. Additional decreases in gross profit as a percentage of revenue related to the prospective 2026 classification of annual incentive compensation accruals in Cost of revenue rather than Selling, general and administrative expenses.
Selling, general and administrative expenses
Three Months Ended September 30,
Change
(in thousands) 2026 2025 $ %
Selling, general and administrative expenses $ 61,735 100.0 % $ 50,522 100.0 % $ 11,213 22.2 %
Less: Non-cash compensation expense 3,797 6.2 % 899 1.8 % 2,898 322.4 %
Less: Transaction, integration, and non-capitalized IPO related costs 5,329 8.6 % 6,709 13.3 % (1,380) (20.6) %
Remaining selling, general and administrative expenses $ 52,609 85.2 % $ 42,914 84.9 % $ 9,695 22.6 %
Selling, general and administrative expenses increased by $11.2 million to $61.7 million for the three months ended September 30, 2026 compared to $50.5 million for the three months ended September 30, 2025. The increase was primarily driven by $3.0 million of higher non-cash compensation expense, including a $5.0 million increase related to legacy equity awards that were modified in connection with the IPO reorganization, a $3.1 million increase from restricted stock and stock option grants, offset by a $5.1 million decrease in the fair value of the RUA liability due to changes in our stock price. The increase also reflected a $10.5 million investment in the organization to support administrative needs and new growth, offset by $2.3 million lower costs incurred to prepare for the IPO in 2026.
Amortization expense
Amortization expense increased by $2.1 million to $17.0 million for the three months ended September 30, 2026 compared to $14.9 million for the three months ended September 30, 2025, which was a result of amortization expense related to newly acquired intangible assets resulting from recent acquisitions and acceleration of amortization expense from revision of useful life of certain CS Energy intangible assets.
Interest expense
Interest expense decreased by $11.9 million to $1.7 million for the three months ended September 30, 2026 compared to $13.7 million for the three months ended September 30, 2025, which was primarily driven by lower interest expense as a result of the retirement of the Term Loans from proceeds from the IPO in February 2026.
Interest income
Interest income increased by $0.8 million to $1.8 million for the three months ended September 30, 2026 compared to $1.0 million for the three months ended September 30, 2025, due to higher interest income on higher cash balances.
Other income, net
Other income, net increased by $1.0 million for the three months ended September 30, 2026 compared to an income of $0.5 million for the three months ended September 30, 2025, which was a result of the remeasurement of our Tax Receivable Agreement liability.
Income tax expense
Income tax expense increased by $20.5 million to $21.0 million for the three months ended September 30, 2026, compared to $0.5 million for the three months ended September 30, 2025. The increase primarily resulted from us becoming subject to U.S. federal, state and local income taxes on our allocable share of taxable income of Holdings following the IPO and Transactions.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table summarizes our consolidated results of operations for the nine months ended September 30, 2026 and 2025, including as a percentage of revenue, as well as the dollar and percentage change from the prior year's nine months ended:
Nine Months Ended September 30,
Change
(in thousands) 2026 2025 $ %
Revenue $ 2,869,841 100.0 % $ 1,696,866 100.0 % $ 1,172,975 69.1 %
Cost of revenue(1)
2,390,243 83.3 % 1,376,505 81.1 % 1,013,738 73.6 %
Gross profit 479,598 16.7 % 320,361 18.9 % 159,237 49.7 %
Selling, general and administrative expenses(2) (3)
225,759 7.9 % 127,749 7.5 % 98,010 76.7 %
Amortization expense 49,176 1.7 % 42,415 2.5 % 6,761 15.9 %
Total operating expenses 274,935 9.6 % 170,164 10.0 % 104,771 61.6 %
Operating income 204,663 7.1 % 150,197 8.9 % 54,466 36.3 %
Loss on debt extinguishment 10,688 0.4 % - - % 10,688 100.0 %
Interest expense 10,041 0.3 % 40,433 2.4 % (30,392) (75.2 %)
Interest income (5,133) (0.2 %) (5,904) (0.3 %) 771 13.1 %
Other income, net (4,107) (0.1 %) (408) - % (3,699) (906.6 %)
Income before income taxes 193,174 6.7 % 116,076 6.8 % 77,098 66.4 %
Income tax expense 31,008 1.1 % 1,842 0.1 % 29,166 1583.4 %
Net income 162,166 5.7 % 114,234 6.7 % 47,932 42.0 %
Net income (loss) attributable to non-controlling interests and LLC members prior to IPO 78,663 2.7 % 586 - % 78,077 NM
Net income attributable to SOLV Energy, Inc. $ 83,503 2.9 % $ 113,648 6.7 % $ (30,145) (26.5 %)
(1)Includes non-cash compensation expense of $4.5 million and nil for the nine months ended September 30, 2026 and 2025, respectively.
(2)Includes non-cash compensation expense of $72.8 million and $2.9 million for the nine months ended September 30, 2026 and 2025, respectively, related primarily to the modification and accelerated vesting of legacy equity awards in connection with the IPO.
(3)Management fees paid to American Securities that are no longer being incurred following the IPO date, one-time IPO related costs, non-recurring transaction and integration costs inclusive of deferred compensation or earn-out structures to employees of acquired businesses that are not related to normal course compensation and are conditioned on post-closing service obligations, and other non-cash or non-recurring expenses. We recorded management fees, including reimbursable expenses, of $0.8 million and $2.7 million for the nine months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026, we recorded $16.6 million related to transaction and integration costs, and noncapitalized IPO related costs.
NM - Percentage is not meaningful
Revenue
Revenue increased by $1,173.0 million to $2,869.8 million for the nine months ended September 30, 2026 compared to $1,696.9 million for the nine months ended September 30, 2025, which was primarily driven by an increase in new construction $1,169.0 million, increase in existing infrastructure of $2.0 million, and an increase in other revenues of $2.0 million, primarily from project development sales.
Cost of revenue increased by $1,013.7 million to $2,390.2 million for the nine months ended September 30, 2026 compared to $1,376.5 million for the nine months ended September 30, 2025, in line with the increase in revenues. Gross profit as a percentage of revenue decreased for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 primarily due to project performance including contingency release from later stage projects, and the impact from a significant repair project in 2025. Additional decreases in gross profit as a percentage of revenue related to the prospective 2026 classification of certain non-cash compensation and annual incentive compensation accruals in Cost of revenue rather than Selling, general and administrative expenses.
Selling, general and administrative expenses
Nine Months Ended September 30,
Change
(in thousands) 2026 2025 $ %
Selling, general and administrative expenses $ 225,759 100.0 % $ 127,749 100.0 % $ 98,010 76.7 %
Less: Non-cash compensation expense 72,776 32.2 % 2,871 2.2 % 69,905 2434.9 %
Less: Transaction, integration, and non-capitalized IPO related costs 16,566 7.3 % 14,792 11.6 % 1,774 12.0 %
Remaining selling, general and administrative expenses $ 136,417 60.4 % $ 110,086 86.2 % $ 26,331 23.9 %
Selling, general and administrative expenses increased by $98.0 million to $225.8 million for the nine months ended September 30, 2026 compared to $127.7 million for the nine months ended September 30, 2025.The increase was primarily driven by $69.9 million of higher non-cash compensation expense, including a $64.4 million increase related to legacy equity awards that were modified in the IPO reorganization, which included a $52.3 million one-time charge, a $7.1 million increase from restricted stock and stock option grants, and a $1.6 million decrease in the fair value adjustment of the RUA liability due to changes in our stock price. The increase also reflected a $27.2 million investment in the organization to support administrative needs and new growth, and $0.9 million of non-recurring transaction and integration costs. These increases were partially offset by prospective 2026 classification of certain non-cash compensation and annual incentive compensation expense accruals in Cost of revenue rather than Selling, general and administrative expenses, lower costs incurred to prepare for the IPO in 2026, and management fees no longer being incurred following IPO.
Amortization Expense
Amortization expense increased by $6.8 million to $49.2 million for the nine months ended September 30, 2026 compared to $42.4 million for the nine months ended September 30, 2025, which was a result of amortization expense related to newly acquired intangible assets resulting from recent acquisitions and acceleration of amortization expense from revision of useful life of certain CS Energy intangible assets.
Interest expense
Interest expense decreased by $30.4 million to $10.0 million for the nine months ended September 30, 2026 compared to $40.4 million for the nine months ended September 30, 2025, which was primarily driven by lower interest expense as a result of the retirement of the Term Loans from proceeds from the IPO in February 2026.
Interest income
Interest income decreased by $0.8 million to $5.1 million for the nine months ended September 30, 2026 compared to $5.9 million for the nine months ended September 30, 2025, which was primarily a result of customer interest received from delayed payments of $2.6 million in 2025, partially offset by $1.8 million higher interest income on higher cash balances.
Other income, net
Other income, net increased by $3.7 million to $4.1 million for the nine months ended September 30, 2026 compared to a income of $0.4 million for the nine months ended September 30, 2025, primarily due to the remeasurement of our Tax Receivable Agreement liability.
Income tax expense
Income tax expense increased by $29.2 million to $31.0 million for the nine months ended September 30, 2026, compared to $1.8 million for the nine months ended September 30, 2025. The increase primarily resulted from us becoming subject to U.S. federal, state and local income taxes on our allocable share of taxable income of Holdings following the IPO and Transactions, as well as from the impact of a one-time, non-cash stock-based compensation charge related to the modification of legacy equity awards that was not deductible for income tax purposes.
Components of our Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of operations. There have been no material changes to the components of our results of operations described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2025, except as described below.
Non-controlling interest
In connection with the Transactions, our wholly-owned subsidiary was appointed as the sole managing member of Holdings pursuant to the SOLV Energy Holdings LLC Agreement. Because we indirectly manage and operate the business and control the strategic decisions and day-to-day operations of Holdings and also have a substantial financial interest in Holdings, we consolidate the financial results of Holdings, and a portion of our net income is allocated to the non-controlling interest to reflect the entitlement of the Continuing Equity Owners to a portion of Holdings's net income. We hold approximately 64.8% of the LLC Interests, and the remaining LLC Interests are held by the Continuing Equity Owners.
Income tax expense
Our business was historically operated through Holdings, a limited liability company. For U.S. federal income tax purposes, Holdings was historically treated as an entity disregarded as separate from SOLV Energy Parent Holdings LP, a Delaware limited partnership that was a partnership for U.S. federal income tax purposes. As a disregarded entity, Holdings was not subject to U.S. federal income tax; however, historical income tax expense reflects certain state and local taxes, and Spartan Infrastructure, Inc. (a subsidiary of Holdings) is a corporation for U.S. federal income tax purposes that is subject to U.S. federal, state and local corporate income tax.
In connection with the Transactions, Holdings became taxable as a partnership for U.S. federal income tax purposes (which will be a continuation of SOLV Energy Parent Holdings LP for U.S. federal income tax purposes) and SOLV Energy, Inc. acquired LLC Interests in Holdings. As a partnership for U.S. federal income tax purposes, Holdings will generally not be subject to U.S. federal income tax. As a result of its ownership of LLC Interests, SOLV Energy, Inc., which is a corporation for U.S. federal income tax purposes, is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of Holdings and is taxed at the prevailing corporate tax rates.
Key Performance Indicators and Non-GAAP Financial Measures
In managing our business and assessing financial performance, we supplement the information provided by the consolidated financial statements with other financial and operating metrics. These operating metrics are utilized by our management to evaluate our business performance, identify trends affecting our business and facilitate long-term strategic planning.
Backlog
We use backlog to forecast our future capital needs and to identify future operating trends that may not otherwise be apparent. We present Total Backlog, which includes all Signed Backlog and Awarded Backlog, and Estimated Corrective Maintenance Backlog.
Backlog is a measure commonly used in our industry but not recognized under GAAP. We believe this measure enables management to more effectively forecast our future revenues and identify future operating trends that may not otherwise be apparent. We believe this measure is also useful for investors in forecasting our future results and comparing us to our competitors. Our methodology for determining backlog may not be comparable to the methodologies used by other companies. Additionally, backlog differs from the amount of the remaining performance obligations, which are described in Note 4 - Revenue from Contracts with Customers in the notes to the unaudited condensed consolidated financial statements.
Gross Margin
Gross margin is defined as gross profit divided by total revenue. We use this metric because it provides insights into the profitability of our jobs and helps us make informed decisions about our cost management.
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except for gross margin)
2026 2025 2026 2025
Revenue $ 1,241,793 $ 753,067 $ 2,869,841 $ 1,696,866
Cost of revenue 1,020,881 604,866 2,390,243 1,376,505
Gross profit $ 220,912 $ 148,201 $ 479,598 $ 320,361
Gross margin
17.8% 19.7% 16.7% 18.9%
EBITDA and Adjusted EBITDA
In addition to financial measures determined in accordance with GAAP, we consider a variety of financial and operating measures in assessing the performance of our business. The key non-GAAP measures we use are EBITDA and Adjusted EBITDA.
EBITDA represents net income before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude: (i) non-cash compensation expense; (ii) the (gain) or loss on the disposal of assets and the extinguishment of debt; (iii) the change in fair value of derivatives; (iv) the change in fair value of investments; (v) non-recurring private equity management fees; (vi) Tax Receivable Agreement liability remeasurements; and (vii) certain other items which we do not consider indicative of future operating performance such as one-time legal settlements not considered part of normal course business operations, transaction, integration, transition and other non-cash costs. We adjust for these items in our Adjusted EBITDA as our management believes these items would distort from their ability to efficiently view and assess core operating trends.
Our presentation of EBITDA and Adjusted EBITDA should not be construed to imply that our future results will be unaffected by these items. We present EBITDA and Adjusted EBITDA because we believe they provide a more complete understanding of the factors and trends affecting our business than GAAP measures alone. Our board of directors, management and investors use EBITDA and Adjusted EBITDA to assess our financial performance because such measures allow them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and items outside the control of our management team (such as income taxes).
EBITDA and Adjusted EBITDA are not defined under GAAP. Our use of the terms EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP. Our presentation of EBITDA and Adjusted EBITDA are intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA should not be considered as alternatives to operating income, net income, earnings per share, net sales, net income margin or any other performance measures derived in accordance with GAAP, or as measures of operating cash flows or liquidity.
EBITDA and Adjusted EBITDA have important limitations as analytical tools, and such measures should not be considered either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations include:
•EBITDA and Adjusted EBITDA do not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt;
•EBITDA and Adjusted EBITDA do not reflect our tax expenses or the cash requirements to pay our taxes;
•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
•Other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.
In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to those eliminated in this Quarterly Report.
The following table reconciles the differences between Adjusted EBITDA and net income, which is the most comparable GAAP measure:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except for gross margin)
2026 2025 2026 2025
Net income $ 122,747 $ 70,104 $ 162,166 $ 114,234
Interest expense
1,742 13,680 10,041 40,433
Interest income
(1,840) (1,049) (5,133) (5,904)
Provision for income taxes
21,019 533 31,008 1,842
Depreciation and amortization 27,133 22,129 77,622 61,892
EBITDA 170,801 105,397 275,704 212,497
Non-cash compensation expense
(2,421) 899 77,249 2,871
Gain on the disposal of property and equipment (140) (260) (174) (257)
Loss on the extinguishment of debt
- - 10,688 -
Tax receivable agreement remeasurement (1,252) - (3,680) -
Change in the fair value of derivative - (33) (1) 21
Non-recurring private equity management fees, transaction, integration and transition costs, and other non-cash costs(1)
5,892 15,529 23,090 26,720
Adjusted EBITDA $ 172,880 $ 121,532 $ 382,876 $ 241,852
(1)Consists of management fees paid to American Securities, that are no longer being incurred following the IPO date, one-time IPO related costs, non-recurring transaction and integration costs inclusive of deferred compensation or earn-out structures to employees of acquired businesses that are not related to normal course compensation and are conditioned on post-closing service obligations, and other non-cash or non-recurring expenses. We recorded management fees, including reimbursable expenses, of nil and $0.8 million for the three months ended September 30, 2026 and 2025, respectively and $0.8 million and $2.7 million for the nine months ended September 30, 2026 and 2025. For the three months ended September 30, 2026, we recorded $5.3 million related to transaction and integration costs, and non-capitalized IPO related costs. For the nine months ended September 30, 2026, we recorded $16.6 million related to transaction and integration costs, and noncapitalized IPO related costs, and wrote-off $5.2 million of capitalized development costs and other development assets included in Cost of revenue related to activity from the historical development business no longer in service, which were offset by miscellaneous immaterial adjustments.
Liquidity and Capital Resources
Sources and Uses of Liquidity
IPO and Subsequent Transactions
On February 12, 2026, we completed our IPO and received $552.5 million net proceeds from the sale of 23,575,000 shares of our Class A common stock at a price to the public of $25.00 per share. The net proceeds from our IPO were used to purchase 23,575,000 newly issued LLC Interests directly from Holdings at a price per unit equal to the IPO price per share of Class A common stock.
In connection with the IPO, SOLV Energy Inc. caused Holdings to use the net proceeds received from the sale of LLC Interests to SOLV Energy, Inc. to repay in full approximately $405.6 million of amounts due upon repayment under the Term Loans, and the remainder for general corporate purposes, which could include growth initiatives, including potential merger and acquisition opportunities. Additionally, we have entered into the New Revolving Credit Facility with various lenders in an aggregate amount of approximately $200.0 million.
Sources and Uses of Liquidity
We have historically funded our operations and business activities primarily from cash flows from operating activities as well as borrowings under our Prior Credit Facilities. As of September 30, 2026, we had $422.1 million of cash, $187.1 million of undrawn availability under our New Revolving Credit Facility and $12.9 million in letters of credit issued and outstanding. We believe that our existing cash balances, cash flows from our operations and borrowings under our New Revolving Credit Facility will be sufficient to fund our operations for at least the next twelve months.
Additional Liquidity Requirements
We are a holding company and have no material assets other than our ownership of LLC Interests. We have no independent means of generating revenue. The SOLV Energy Holdings LLC Agreement provides for the payment of certain distributions to the Continuing Equity Owners and to us in amounts sufficient to cover the income taxes imposed on such members with respect to the allocation of taxable income from Holdings as well as to cover our obligations under the Tax Receivable Agreement and other administrative expenses.
Regarding the ability of Holdings to make distributions to us, the terms of our New Revolving Credit Facility contain covenants that may restrict Holdings or its subsidiaries from paying such distributions, subject to certain exceptions (including with respect to post-IPO public company expenses). Further, Holdings is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Holdings (with certain exceptions) exceed the fair value of its assets.
In addition, under the Tax Receivable Agreement, we are required to make cash payments to the TRA Participants equal to 85% of the tax benefits, if any, that we actually realize (or in certain circumstances are deemed to realize), as a result of (i) our allocable share of existing tax basis acquired in connection with the Transactions; (ii) the utilization of certain tax attributes of the Blocker Companies (including net operating losses); (iii) tax basis adjustments resulting from future redemptions or exchanges of LLC Interests; and (iv) certain tax benefits (such as interest deductions) arising from payments made under the Tax Receivable Agreement. We expect the amount of cash payments that we will be required to make under the Tax Receivable Agreement will be significant. The actual amount and timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors, including the timing of redemptions or exchanges by the Continuing Equity Owners, the amount and timing of the taxable income we generate in the future, and the tax rates then applicable. Any payments made by us to the TRA Participants under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us.
To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if Holdings does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.
Additionally, in the event we declare any cash dividends, we intend to cause Holdings to make distributions to us in amounts sufficient to fund such cash dividends declared by us to our stockholders. Deterioration in the financial condition, earnings, or cash flow of Holdings for any reason could limit or impair its ability to pay such distributions. If we do not have sufficient funds to pay taxes or other liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity and financial condition and subject us to various restrictions imposed by any such lenders.
See "Item 1A. Risk Factors-Risks Related to Our Organizational Structure" and "Item 13. Certain Relationships and Related Transactions, and Director Independence" of our Annual Report on Form 10-K for the year ended December 31, 2025.
Cash Flows
The following tables present a summary of our consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025:
Nine Months Ended September 30,
(in thousands) 2026 2025
Net cash provided by operating activities $ 177,272 $ 122,652
Net cash used in investing activities $ (64,121) $ (68,233)
Net cash used in financing activities $ (85,895) $ (54,337)
Operating activities
Net cash flow provided by operating activities for the nine months ended September 30, 2026 was a net cash inflow of $177.3 million, an increase of $54.6 million as compared to a net cash inflow of $122.7 million for the nine months ended September 30, 2025. This increase was driven by a $136.1 million increase in net income after adjusting for non-cash items, partially offset by higher net cash outflows of $81.5 million related to operating assets and liabilities, primarily supplier deposits and materials inventory, as well as timing of customer collections.
Investing activities
Net cash flow used in investing activities for the nine months ended September 30, 2026 was a net cash outflow of $64.1 million, a decrease of $4.1 million as compared to a net cash outflow of $68.2 million for the nine months ended September 30, 2025. This decrease was primarily driven by a $18.0 million decrease in cash paid for acquisitions, partially offset by a $13.9 million increase in capital expenditures.
Financing activities
Net cash flow used in financing activities for the nine months ended September 30, 2026 was a net cash outflow of $85.9 million, an increase of $31.6 million as compared to a net cash outflow of $54.3 million for the nine months ended September 30, 2025. This increase was primarily driven by the increase of term debt repayments from extinguishment of term debt of $402.2 million, repurchase of LLC interests of $291.7 million, increased distributions to members of Holdings of $116.8 million, $47.0 million of term debt and equipment financing borrowings in 2025, a $5.5 million increase for payment of deferred acquisition consideration, a $8.8 million increase in payments for equity and debt issuance costs, and a $3.9 million increase in the payment of finance leases and equipment financing, offset by net proceeds from issuance of Class A common stock of $844.2 million.
Critical Accounting Policies and Estimates
Our unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts may differ from such estimated amounts, we believe such differences are not likely to be material. For additional detail regarding our critical accounting policies and estimates, please see our discussion included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our critical accounting estimates since our Annual Report, except as described below.
Income Taxes
Holdings was historically an entity disregarded as separate from SOLV Energy Parent Holdings LP for U.S. federal income tax purposes. In connection with the Transactions, Holdings became taxable as a partnership under the appropriate provisions of the Code and will be a continuation of SOLV Energy Parent Holdings LP for U.S. federal income tax purposes. Therefore, federal income taxes are payable by the unitholders and no provisions are made for federal income taxes with respect to income of Holdings in the consolidated financial statements. However, although various state and local income taxes are imposed on a "flow- through" basis and are thus payable by the unitholders, Holdings has historically been subject to certain state and local income taxes at the entity level. In addition, one or more subsidiaries of Holdings are corporations for U.S. federal income tax purposes that are subject to U.S. federal, state and local corporate income tax.
After the closing of the IPO, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Holdings and are taxed at the prevailing corporate tax rates. In addition to tax expenses, we may incur expenses related to our operations, plus expected payments under the Tax Receivable Agreement, which may be significant. We intend to cause Holdings to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. We will account for the income tax effects and corresponding Tax Receivable Agreement's effects resulting from future taxable exchanges or redemptions of LLC Interests held by Continuing Equity Owners and its permitted transferees by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of the purchase or redemption.
Further, we evaluated the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the Tax Receivable Agreement will be estimated at the time of any purchase or redemption and is expected to be accounted for as an adjustment to member's equity, and the effects of changes in any of our estimates after this date will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. A change in the assessment of such consequences, such as realization of deferred tax assets, changes in tax laws or interpretations thereof could materially impact our results.
Under the provisions of ASC 740, Income Taxes, as it relates to accounting for uncertainties in tax positions, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.
Equity-Based Compensation
The 2026 Equity Incentive Plan, which was approved in connection with the IPO, provides for the issuance of equity-based awards, including stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. We have granted equity instruments consisting of restricted stock awards ("RSAs"), restricted stock units ("RSUs"), stock options and restricted unit appreciation awards ("RUA") to certain employees. We recognize non-cash compensation expense for equity awards over the requisite service period. The RSAs, RSUs, stock options and RUA vest following time-based vesting conditions.
The fair value of each RUA is based on the cash amount a holder would receive upon the award's vesting, which prior to the IPO was equal to the fair value of a Class A Unit of SOLV Energy Parent Holdings LP. The fair value of the Class A Units of SOLV Energy Parent Holdings LP was estimated using generally accepted equity valuation and allocation methods. Subsequent to the IPO, the fair value of RUA awards is derived from the fair market value of our Class A common stock on the settlement date. The RSAs are accounted for using a fair-value based method in which the fair values are determined by the stock price on the date of grant.
As of the date of this Quarterly Report, all of the RUA awards have vested and the outstanding RUA awards will be settled in cash within 60 days following December 23, 2026, based on the fair market value of the Class A common stock on December 23, 2026. The amount that is payable to settle the RUA awards is approximately $31.6 million as of September 30, 2026 based on the fair market value of the Class A common stock thereon.
We use the Black-Scholes pricing model to estimate the fair value of the stock options. The Black-Scholes option pricing model requires the input of highly subjective assumptions including the risk-free interest rate, the expected volatility, the expected dividend yield, and the expected time to liquidity. The assumptions used to determine the fair value of the stock options represent our best estimates. These estimates involve inherent uncertainties and the application of management's judgment. Non-cash compensation expense is based on awards ultimately expected to vest and is reduced for forfeitures as they occur. If factors change and different assumptions are used, our non-cash compensation expense could be materially different in the future.
Off-Balance Sheet Arrangements
As of September 30, 2026, we had no off-balance sheet arrangements.
Recent Accounting Pronouncements
See Note 3 - Summary of Significant Accounting Policies, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for information regarding new accounting pronouncements.
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