PPC Partners Inc. - 2015 Annual Report

PPC Partners Inc. 2015 Annual Report

Introduction 01

Letter to shareholders from James J. Ditter, CEO

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Financial highlights

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Non-executive chairman’s comments from Richard R. Pieper Sr.

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Report from independent auditors

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Notes to consolidated financial statements 18

Consolidated balance sheets 28

Consolidated statements of operations, stockholders’ equity & cash flows

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Branch locations, officers and directors

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The mission of PPC is to provide technically advanced building services, equipment services, and on-site electrical construction while maintaining a safe, high quality, low cost advanced service delivery system.

We are directed by Old Testament wisdom and Jesus’ example.

The information contained in this report is highly confidential and proprietary, and contains trade secrets relating to PPC Partners, Inc. and its subsidiaries. This information is to be read only by the shareholder who receives it, and any disclosure, distribution, or use of the information contained in this report without the express written consent of PPC Partners, Inc., is expressly prohibited. PPC Partners, Inc. will pursue all available equitable and legal remedies in the event of unauthorized disclosure or use of the information contained in this report.

In addition, the material contained in this report is protected under copyright laws, and any unauthorized use or disclosure may subject the infringing party to liability under Title 17, USC

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PPC Partners aspires to develop strong leaders who are first and foremost servant leaders.

Values to SERVE Our commitment to servant leadership has been the key to our success and assures our future.

We live it, we breathe it. Servant leadership manifests itself in everything we do.

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Our entrepreneurial structure encourages people to learn and grow.

Values to GROW It’s why we’re still here and why we’re successful.

We look for people with ambition and drive—an entrepreneurial spirit that recognizes the value of teamwork to foster a culture of servant leadership.

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The driving desire to completely satisfy customers by providing quality services at a fair price is at the foundation of our business. Satisfied employees create satisfied customers — and drive our company’s ongoing success. Our culture, so completely embodied by our people, powers our success.

Our people are our power.

Values to LEAD 7

Letter to Shareholders

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Dear Employee and Retiree Shareholders, Most days when I walk into my office I’m thinking about Mark Twain’s words: “Apparently, there is nothing that cannot happen today.” That could be a scary thought, but the longer I’m at PPC Partners, I hear those words in a very positive way. Because we take our culture as seriously as our technical work, I think every day something good will happen. In my 2015 Annual Report to you, let me explain why.

PPC Partners had a safe and successful year creating a positive impact for our communities, customers, employees, and shareholders. Here are examples.

Positive Trends Our Company’s charitable foundation, provided over $600,000 from our earnings to support local charities that improve the communities where we live and operate. Equally as important was the time and talent that you provided demonstrating our commitment with your actions.

Our customers increased their business with us. As a result, earned revenues grew by 7.6% over 2014. At the same time, customers communicated their satisfaction with our service by awarding us a 9.5 satisfaction rating on a 10 point scale.

During 2015, we accomplished as much inside the Company as outside. A new PPC Partners website was rolled-out along with an intranet site to improve communication to prospects, customers, employees and shareholders. For us, communicating our culture is key. PPC Partners culture includes: always holding

safety as our number one priority, being a learning organization, and leading by serving customers, each other, and our communities.

What we do is more important than what we say. Our actions exemplify the PPC culture. We never rest on our laurels. We constantly scrutinize what we have done and what can we do to become even better for our entire community.

As part of the annual employee satisfaction and engagement survey, the company seeks your feedback about how we can improve. One of the opportunities you listed was communication, and strides are being made here. I have seen improvements at every company. Some branches have adopted sending weekly texts; others have revamped their newsletter or begun using social media.

Important accomplishments in 2015 were: Safety, as measured by hours per injury, improved over 17% to 114,000 hours, or 175% better than the industry Customer satisfaction remains high with a rating of 9.5 on a 10 point scale Employee satisfaction increased to 91%, up from 89% Record revenues of $283 million, up 7.6% over last year Record net income of $8.8 million, or $8.32 per share

Safety Company safety results improved in 2015 resulting in fewer recordable injuries and lost work days as we strive for an injury free workplace. Overall, PPC Partners’ safety results were one OSHA recordable injury per 114,000 hours worked compared to one OSHA recordable injury per 97,000 hours worked in 2014. The industry average is one OSHA recordable injury per 65,000 hours worked. During 2015, PPC Partners had 25 OSHA recordable injuries, compared to 27 in the prior year and 137 lost work days. We never forget that a recordable injury is a person and their loving family and friends.

Clear Horizons In December, Clear Horizons’ two biogas facilities were sold to Clean Fuel Partners, San Francisco, CA. Our journey in the biogas industry was both challenging and costly. We paved the path for a new industry that will make the world a cleaner place for future generations. Of that we are proud. However, your investment has underwritten significant education that will benefit other companies in this industry, not us.

Having said that, PPC did gain important experience in how we might evaluate business opportunities in the future as we constantly look for ways to add value to our organization and opportunities for our employees.

I am particularly proud of the Clear Horizons employees for their dedication addressing the many adversities presented. They approached each with a positive attitude and winning spirit. All of the Clear Horizons’ employees were hired by Clean Fuel Partners.

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I want to recognize Norm Doll who stepped in as COO of Clear Horizons in September of 2014. Norm provided the knowledge and leadership to make the facility safer to operate and positioned the business to be sold. Norm’s tenacity in attacking the challenges and implementing solutions allowed Clear Horizons to get back in compliance with our operating permits and in good standing with the Wisconsin Department of Natural Resources.

Employee Engagement and Satisfaction PPC Partners’ employee engagement and satisfaction ratings continue not only to exceed national benchmarks but also increase in the satisfaction rating. Overall, 46% of our employees reported to be fully engaged, meaning we can all demonstrate discretionary effort to achieve our business goals and we enjoy making those contributions. Experts claim there is a direct correlation of engagement and satisfaction to company performance. I am proud to report at Pieper Electric we’re proving it. We achieved the highest engagement and had another record year. Pieper Electric’s safety, employee satisfaction, customer satisfaction and financial performance were all at the excellent level or higher. They provide us all an outstanding model.

PPC’s employee satisfaction scores increased to 91% compared with 89% in 2014. We are following the Golden Rule as this favorable rating increased by 1% to 94%. Finally, during 2015, employees participated in over 39,000 hours of continuing education. You have shown that you want to get better for yourselves and your colleagues.

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Customer Satisfaction Our Customer Satisfaction ratings are consistent with the prior year at 9.5 on a 10 point scale. The high levels of customer satisfaction you produce generate repeat business and fuel our growth. Your efforts in this area are commendable. Keep up the great work!

In 2015, the Company invested $2.7 million in vehicles and equipment to support current operations and future growth. Backlog was $57.5 million as of December 31, 2015, a decrease from $69.4 million at the end of 2014. We still have work to be done.

We can celebrate 2015 but we can’t rest on our laurels.

Financials In 2015, return on shareholder investment was 30.7% with the year-end stock price up $8.32 to $35.44.

The following accomplishments led to those results:

Individual Company Results Pieper Electric, Inc. Pieper Electric had 16 OSHA recordable injuries in 2015, compared to 12 OSHA recordable injuries in 2014. The hours per injury decreased to one in 93,000 compared to one in 113,000 in 2014. Company employee engagement and satisfaction scores remained high at 49% and 92%, respectively. The Company also maintained its outstanding customer satisfaction score of 9.6 on a 10 point scale. Pieper Electric’s employee engagement and customer satisfaction are the highest among all PPC Partners’ companies.

Record earned revenues of $283 million, a 7.6% increase over 2014 Record income from continuing operations of $9.8 million compared to $4.2 million in 2014 Job effectiveness (labor productivity) improved 12% on jobs greater than $1 million through effective use of prefab and waste elimination standards All operating companies improved their operating results over 2014 Clear Horizons was sold in December reducing our financial risk Consequently, our balance sheet is strong with $37.0 million of stockholders’ equity which is $6.8 million greater than the end of 2014. During 2015, the Company redeemed $2.2 million of stock, and issued $251,000. Notes payable and long-term debt increased by $1.5 million.

Earned revenues at Pieper Electric were $171.3 million or an increase of 4.2%. At the beginning of 2015, the Transportation branch transferred from Pieper Electric to MP Systems. Excluding the Transportation branch from the 2014 earned revenue results in increasing the year over year growth to 10.8%. The 2015 operating income is $13.6 million compared to $7.9 million in 2014 or an increase of 72%. Three branches stand out because they increased their earned revenues in excess of 20% and doubled their 2014 operating income. Those branches include Major Construction, Kenosha and Madison. Other branches achieving 10% or greater growth in operating income are Water/Wastewater Construction, Light Construction,

Industrial Branch 7, and Commercial Branch 17. All branches recorded operating income in 2015. Job losers increased to 2.0% of revenue from 1.3% in 2014. Branch and corporate expenses were $21.7 million or 12.7% of earned revenue.

MetroPower, Inc. MetroPower continues to lead PPC Partners in safety results with one OSHA recordable injury per 227,000 hours. Ten of MetroPower’s twelve branches were injury free for the entire year. During 2015 there were five OSHA recordable injuries compared with seven in 2014. Company employee engagement and satisfaction scores were 43% and 88%, respectively. Both of those scores are well above national averages. MetroPower maintained its outstanding customer satisfaction score of 9.5 on a 10 point scale. During 2015, the Company added a customer newsletter along with updating and rebranding the employee newsletter. Both are branded as PowerPress.

Earned revenues at MetroPower were $91.8 million or an increase of 23.2 %. Three branches grew over 50% significantly contributing to the increased revenues. Those branches were Albany Construction, CarolinaPower and ESS. Operating income was $4.0 million compared to $3.0 million in 2014 or a 33% increase. Four branches significantly increased their operating income growing more than 30%. Those branches include ESS, MetroServices, ColumbusPower, and AE Industrial. Eleven of MetroPower’s twelve branches were profitable. Job losers were 3.7% of earned revenue, an increase from 2.5% in 2014. Branch and corporate expenses were $11.3 million or 12.4% of earned

revenue. MetroPower’s service and jobbing earned revenues were approximately 49% of total earned revenues, in alignment with the Company’s strategy.

MP Systems, Inc. MP Systems had one OSHA recordable injury for every 54,000 hours worked or a 69% improvement compared to 2014. Those statistics are still below the industry average and MP Systems’ leadership continues to work towards the goal of zero injuries. MP Systems had four OSHA recordable injuries in 2015 compared to eight the prior year. Company employee engagement and satisfaction scores increased to 42% and 88%, respectively, up from 26% and 85% in 2014. The Company also improved its customer satisfaction score to 9.1 on a 10 point scale compared to 8.5 in 2014.

Earned revenues at MP Systems were $19.9 million compared to $24.2 million in 2014. The decrease is attributable to Donovan Construction’s earned revenues, which were $3.3 million, down from $15.9 million in 2014. Subsequent to the tragic accident in July of 2014, Donovan Construction’s two primary customers implemented a one year moratorium on working with our Company. The Company was not able to replace that revenue amounting to $9.1 million in 2014. Those one year moratoriums have now been lifted. MP Systems recorded an operating loss of $1.9 million in 2015 compared to an operating loss of $3.9 million in 2014.

At the beginning of 2015, the Pieper Electric Transportation branch became part of MP Systems and contributed $7.6 million of earned revenue. As mentioned in last year’s letter, PieperLine added some experienced

employees in project management and field leadership in the second half of 2014 which enabled the branch to successfully execute work. Both the Transportation branch and PieperLine were profitable in 2015.

Discontinued Operations Clear Horizons lost $1 million net of taxes and is reported as Discontinued Operations. That result is favorable compared to a $3.6 million net loss in 2014. The corporate entity for Clear Horizons is being dissolved and will no longer have an impact on PPC Partners’ financial results.

Conclusion When I consider our culture and the contributions each of you make I think we share the winning attitude of the great American Olympic Silver Medalist Florence Griffith Joyner. In an interview, Joyner said, “When anyone tells me I can’t do anything, I’m just not listening anymore.” That’s our collective attitude.

In all humility we say we will strive to be an exceptional company. No one dares tell us otherwise.

In summary, I would like to thank all our employees, whose dedication and efforts produced excellent results for each of the four pillars we use to measure success and focus our improvement efforts. Our company’s safety, employee satisfaction, customer satisfaction and financial performance are all at levels you should be proud of. Let’s continue to challenge ourselves to grow and continue to improve.

James J. Ditter Chief Executive Officer 11

Financial Highlights

Return on Equity After taxes 25%

20%

15%

10%

5%

0%

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07

08

09

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Customer Satisfaction E x ternal results 10 9.5 9 8.5 8 7.5 7

05

12

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07

08

09

10

11

12

13

14

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Safety

E xpressed in OSHA recordable accidents per thousand hours worked 150 140 130 120 110 100 90 80 70 60 50

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06

07

08

09

10

11

12

13

14

15

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14

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Employee Satisfaction

Percent of employees satisfied with all aspects of their job, Gold is the Golden Rule 95 100 95 90 85 80 75 70

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07

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Comments from Non-executive Chairman

Dear friend and colleagues,

Now, let me summarize strengths from the past

How do we determine for ourselves if we are succeeding and improving in all areas of the company? We could look to statistics, or industry, business and cultural leaders for answers. Better yet is to look inward and ask ourselves if, after all our hard work this year, have we grown as persons while serving and being served? Are we healthier, wiser, freer, and more autonomous?

Are others likely to follow our examples?

year. They underscore why PPC is a great place to

Non-Executive Letter

We looked inward and agreed a long time ago that safety is the number one priority in the company; not just a priority but a moral imperative. Our other progressive

work and do business. Join us at the Annual Meeting to celebrate.

Annual profitability is at a new record.

Safety remains our number one goal.

Customer and employee satisfaction are exceptional.

Personal professional development is constantly encouraged.

Active employees own 88% of the voting shares, are 99% of the voting shareholders.

practices have resulted in high customer and employee satisfaction that will carry us into the future.

With the exception of cash management, the company is diversified by: Service types Organizational diversity Geography Financial health Excellent reputation, a top 3 service provider in nearly all our markets.

I would add our processes have been a generation ahead of the industry and many other businesses.

Here’s more encouragement. Each of you plays a pivotal part providing leadership in our interactions with every other employee, vendor, and community member. So, learn all you can about how your department, branch, company or companies is/are doing.

We could easily make the case that the company’s ability to defy traditional structured thinking has been the source of our power to serve, do the right thing and maintain our entrepreneurial spirit. But only

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when we have grown deep into ourselves do we find

As we have been promised and experienced, goodness

the illumination to rise to exceptional levels that are

is a building block for a healthy life. You and all those

rich, rewarding and infectious. We are wowed by

before you have contributed: live it so others see it.

leaders who do not seek applause or think they are extraordinary. So, my word of caution is that humility is a significant attribute respected by all. Sometimes the answers we seek are found in the wisdom of the group not the lone “genius”.

Yes, safety plus customer and employee satisfaction parameters are outstanding and return on equity is back in the old, accustomed groove. We don’t need more processes but improved, simplified, faster present processes. These will make work easier for everyone.

To receive paychecks we must get the bills out and collect the cash. I cherish our long term employees and love the younger ones who will carry all this into the future.

Let me leave you with two thoughtful quotes. The first by the brilliant 18th century thinker and writer, Samuel Johnson: “Great works are performed not by strength, but by perseverance.” The second is from my favorite book... “let us run with perseverance, the race marked out for us.” Hebrew 12:8 (NIV) New testament Yes; perseverance, grit and sticking to it are character traits fundamental to those who realize their best expectations. I’m proud to say at this company, we sure have both types.

I remain in your service.

Dick Pieper Non-Executive Chairman

We are not isolated from the world’s seismic shifts.

Not to be an alarmist, but are we ready for the new, non-state nations? Daily, we witness information and social revolutions, see globalization and unusual networks arise. We will experience corresponding changes in the ways societies, communities and markets function. We will likely see a radically changed political world.

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Report from Independent Auditors

To the Board of Directors PPC Partners, Inc. Milwaukee, Wisconsin

Auditors’ Responsibility

We have audited the accompanying consolidated

We conducted our audits in accordance with U.S. GAAP.

financial statements of PPC Partners, Inc. and its

Those standards require that we plan and perform the

subsidiaries (the “company”), which comprise the

audits to obtain reasonable assurance about whether

consolidated balance sheets as of December 31, 2015

the consolidated financial statements are free from

and 2014, and the related consolidated statements

material misstatement.

of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures

Management’s Responsibility for the Financial Statements

selected depend on the auditors’ judgment, including

Management is responsible for the preparation and

of the consolidated financial statements, whether due

fair presentation of these consolidated financial

to fraud or error. In making those risk assessments,

statements in accordance with accounting principles

the auditor considers internal control relevant to

generally accepted in the United States of America

the company’s preparation and fair presentation of

(U.S. GAAP); this includes the design, implementation,

the consolidated financial statements in order to

and maintenance of internal control relevant to the

design audit procedures that are appropriate in the

preparation and fair presentation of consolidated

circumstances, but not for the purpose of expressing

financial statements that are free from material

an opinion on the effectiveness of the company’s

misstatement, whether due to fraud or error.

internal control. Accordingly, we express no such

the assessment of the risks of material misstatement

opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates

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made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the company as of December 31, 2015 and 2014 and the results of its operations and its cash flows for the years then ended in accordance with U.S. GAAP.

Baker Tilly Virchow Krause, LLP Milwaukee, Wisconsin March 15, 2016

Non-Executive Letter 17

Notes to Consolidated Financial Statements As of December 31, 2015 and 2014 NOTE 1 - Nature of Operations PPC Partners, Inc. (the “company”) is the parent company of Pieper Electric, Inc. (Pieper), MetroPower, Inc. (MetroPower), MP Systems, Inc. (MPS), and Clear Horizons LLC and its wholly owned subsidiaries (Clear Horizons).

Pieper provides electrical and mechanical services to industrial, commercial, and residential customers, primarily throughout Wisconsin, Northern Illinois, and the upper peninsula of Michigan, and operates under the following names: Pieper Electric, PieperPower, Spring City Electric, Schultz Electric, Systems Technologies, and Ideal Mechanical.

MetroPower provides electrical and mechanical contracting services to industrial, commercial, and residential customers, primarily throughout the southeastern United States and Wisconsin, and operates under the following names: MetroPower, Carroll Electric, ESS, CarolinaPower, and MetroPower Plumbing.

MPS operates as a multilocation electrical contractor under the names of Donovan Construction and PieperLine. Its principal markets are overhead and underground electrical distribution lines, transmission lines, and substation construction.

Clear Horizons built, owned, and operated two anaerobic digester systems, both systems are located in Wisconsin. See Note 14 for further discussions of Clear Horizons.

NOTE 2 - Summary of Significant Accounting Policies Principles of Presentation The accompanying consolidated financial statements include the accounts of Pieper, MetroPower, MPS, and Clear Horizons. Significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents The company defines cash and cash equivalents as liquid, short‑term investments with a maturity at the date of acquisition of three months or less. The company maintains cash in bank deposit accounts, which, at times, may exceed federally insured limits. The company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks.

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Trade Receivables and Allowance Method Used to Record Bad Debts Trade receivables are uncollateralized customer obligations which generally require payment within thirty to forty‑five days from the invoice date. Trade receivables are stated at the invoice amount. Account balances with invoices over sixty days old are considered delinquent.

Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice. The Company’s normal billing practice is to defer billing retentions, however occasionally trade receivables may include retentions, a portion of which may not be collected within one year.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the trade receivables. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due the company could be adversely affected. All accounts or portions thereof deemed to be uncollectible or that require excessive collection costs are written‑off to the allowance for doubtful accounts. An estimated allowance for doubtful accounts of $755,285 and $959,603 has been recorded by the company against receivables for the years ended December 31, 2015 and 2014, respectively.

In addition, the company follows the practice of filing liens within the statutory time frame on construction projects. The liens act as security for collection of construction receivables and have the effect of restricting the customer’s ability to subsequently transfer title of the constructed property and to obtain certain kinds of financing without first satisfying the lien.

Recognition of Construction Revenue and Cost The accompanying financial statements have been prepared using the percentage‑of‑ completion method of accounting for long‑term contracts and, therefore, take into account the cost and estimated earnings and revenue to date on uncompleted contracts. Revenues from fixed‑price and negotiated cost‑plus construction contracts are recognized on the percentage‑of‑completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract based on current estimates of cost to complete.

Construction costs include all direct labor and benefits, materials, subcontracts and an allocation of indirect construction costs. Project management, supervision and related expenses are allocated based upon hours charged. Equipment, shop and yard costs are allocated based on actual usage. The difference between actual expenditures for indirect construction costs and the amounts allocated is charged to operations in the year incurred.

As long‑term construction projects extend over one or more years, revisions in costs and estimated earnings during the course of the work are reflected in the accounting period in which the facts which require the revision become known. During 2015 and 2014, revisions to estimates were required on certain contracts that were in process at the end of 2014 and 2013.

The effect of these revisions was to increase income before income taxes by approximately $1,878,000 in 2015 and by approximately $519,000 in 2014. At the time a loss on a construction project becomes known, the entire amount of the estimated loss is recognized in the financial statements. Claims are included in revenue earned when received. Estimated contract totals are revised for anticipated change orders when management can accurately determine the outcome of those change orders.

The current assets reflected on the balance sheets as “Costs and estimated earnings in excess of billings on uncompleted contracts” and “Costs in excess of billings on minor jobs in progress” represent revenue recognized in excess of amounts billed (underbillings). The current liabilities reflected on the balance sheets as “Billings in excess of costs and estimated earnings on uncompleted contracts” and “Billings in excess of costs on minor jobs in progress” represent billings in excess of revenues recognized (overbillings). Unbilled revenue on completed contracts represents receivables related to completed contracts for which the final bill was not yet released at the balance sheet date. Assets and liabilities related to long‑term construction projects are included in current assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of completion, although this may require more than one year.

Minor jobs represent numerous short‑term contracts. Related to minor jobs and service or repair work, revenue is recognized as costs are incurred in equal proportion to the costs incurred. Accordingly, gross profit is deferred until the work is substantially complete, due to the short‑term nature of the contracts. Management determines a minor job to be substantially complete when the customer has agreed to pay for the final billing.

The length of the contracts can vary from one day to over one year. Branch and corporate expenses, which include selling, general, and administrative expenses, are charged to operations as incurred and are not allocated to project cost except for project management labor and related expenses.

Inventories Inventories, which consist primarily of materials and supplies contained in service vans for use on contracts or service calls, are valued at the lower of cost (using the first‑in, first‑out method) or market.

Property and Equipment Property and equipment are stated at cost. Major replacements and improvements are capitalized, while general repairs and maintenance are charged to expense as incurred.

Depreciation of all property and equipment is provided for on the straight‑line method.

Land and construction in progress are not depreciated. Improvements to leased properties are amortized on a straight‑line basis over the shorter of the term of the lease or the useful life of the asset. The estimated useful lives are as follows: Description

Years

Buildings and improvements

40

Machinery and equipment

3-7

Office furniture

3-7

Trucks, moving equipment and autos

3-7

Leasehold improvements

7-10

Impairment of Long‑Lived Assets The company reviews long‑lived assets, including property and equipment and intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. The carrying amount of an asset is not recoverable if it exceeds the undiscounted sum of cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value and recognized in the period the impairment was identified. The Company recognized an

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Notes to Consolidated Financial Statements continued impairment loss of $3,575,000 for the year ended December 31, 2014, on digester equipment owned by Clear Horizons, which was sold during 2015 and is further discussed in Note 14. The impairment loss is included in discontinued operations on the restated statement of operations for the year ended December 31, 2014. No impairment loss has been recognized in 2015.

Intangible Assets Intangible assets are comprised of customer relationships and noncompete agreements resulting from acquisitions. The customer relationships and noncompete agreements are being amortized on a straight‑line basis for a period of 10‑15 years.

Amortization expense for the years ended December 31, 2015 and 2014 was $12,501 and $12,506, respectively. Estimated amortization expense is expected to total $15,504 for each year through 2020 and then total $4,066 for the years 2021 through 2024 and then $1,066 for the years 2025 through 2027.

Income Taxes The corporation uses the liability method of calculating income taxes. Under this method, deferred income taxes are determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax reporting purposes. See Note 4 for additional information.

Advertising Advertising costs are expensed as incurred. Advertising expense was $278,140 and $252,933 for the years ended December 31, 2015 and 2014, respectively.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include accounts receivable valuation, property and equipment valuation, deferred income tax valuation, accrued insurance, accrued deferred compensation, and the percentage‑of‑completion and gross profit on uncompleted contracts. Actual results could differ significantly from those estimates.

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Derivatives The company’s derivative instrument consisted of an interest rate swap agreement. The company recognized derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, whether the hedge is a cash flow hedge or a fair value hedge. The company used derivatives to manage risks related to interest rate movements. The company entered into an interest rate swap contract in 2011 that expired in 2015 and management has deemed the related liability to be immaterial as of December 31, 2014.

Fair Value Measurements The Company measures and discloses the fair value of financial instruments using a framework that provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of fair value hierarchy under the standard are described below: Level 1 – Fair value is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets in which the Company can participate. Active markets are those in which transactions for the asset or liability occurs in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs, other than quoted prices in active markets included in level 1, are either directly or indirectly observable as of the reporting date. Level 2 also includes those financial instruments and assets that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to fair value measurement and includes in level 3 all of those whose fair value is based on significant unobservable inputs.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation

techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in methodologies used at December 31, 2015 and 2014.

Warranty The Company provides warranties which generally are for one year after completion of a project. Management estimates the provision based on historical claims experience.

The accrued warranty liability is included in the other accrued expenses line on the balance sheet and was not significant at December 31, 2015 or 2014.

Subsequent Events The company has evaluated subsequent events through March 15, 2016, the date that the consolidated financial statements were available to be issued for events requiring recording or disclosure in the company’s consolidated financial statements.

NOTE 3 - Costs and Estimated Earnings on Uncompleted Contracts Uncompleted long‑term contracts at December 31 are as follows: 2015

2014

$136,039,505

$ 122,377,101

Estimated earnings

19,019,076

11,706,984

155,058,581

134,084,085

Less: Billings to date

154,827,099

133,336,062

$ 231,482

$ 748,023

Costs incurred on uncompleted contracts

The above data is presented in the accompanying consolidated balance sheets as follows: 2015

2014

Costs and estimated earnings in excess of billings on uncompleted contracts

$7,333,278

$ 6,328,186

Billings in excess of costs and estimated earnings on uncompleted contracts

(7,101,796)

(5,580,163)

$ 231,482

$ 748,023

The following schedule shows a reconciliation of backlog representing signed contracts at December 31: Unearned contracts balance ‑ beginning of year New construction and change orders during the year Less: Contract revenues earned Net backlog at year‑end

2015

2014

$ 50,403,998

$ 51,319,046

269,323,143

262,135,054

319,727,141

313,454,100

(282,934,206)

(263,050,102)

$ 36,792,935

$ 50,403,998

NOTE 4 - Income Taxes The company records amounts currently prepaid for federal and state income taxes within the prepaid expenses, deposits, and other current assets line item on the accompanying consolidated balance sheets. At December 31, 2015 and 2014 the prepaid income taxes were approximately $330,000 and $601,000, respectively. The tax effects from an uncertain tax position can be recognized in the financial statements, only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more‑likely‑than‑not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The company recognizes interest and penalties related to income taxes and unrecognized tax positions within income tax expense.

The company did not have any unrecognized tax provisions at December 31, 2015 or 2014.

Total deferred tax assets (primarily related to deferred compensation, accounts receivable valuation, net operating loss and charitable contribution carryforwards) were $1,281,000 and $1,454,000 at December 31, 2015 and 2014, respectively. Total deferred tax liabilities (primarily related to certain employee benefits and depreciation differences) were $831,000 and $978,000 at December 31, 2015 and 2014, respectively. The company has elected to adopt ASU No. 2015‑17 and present deferred tax assets and liabilities as noncurrent on the consolidating balance sheet.

21

Notes to Consolidated Financial Statements continued NOTE 6 - Long‑Term Debt

The components of the provision for (benefit from) income taxes consist of the following: 2015

2014

Long‑term debt consisted of the following at December 31:

Current provision: Federal State Deferred provision (benefit) Total tax provision ‑ continuing operations Tax benefit of discontinued operations Net tax provision

$ 3,973,784

956,000

333,000

Stock redemption ‑ Note 1

26,000

(1,992,000)

Stock redemption ‑ Note 2

5,648,336

2,314,784

(561,000)

(1,968,000)

$5,087,336

$ 346,784

The company’s effective tax rate for the years ended December 31, 2015 and 2014 approximates the applicable federal and state statutory rates.

NOTE 5 - Line of Credit The company has a $20,000,000 revolving credit agreement (the agreement) with a financial institution that matures on May 31, 2017. The revolving credit borrowing, which is guaranteed by the subsidiaries, but otherwise unsecured, bears interest payable monthly at the rate of LIBOR plus 2.25% through September 15, 2014 and plus 2.00% through its maturity (effectively 2.24% and 2.15% at December 31, 2015 and 2014, respectively). As of December 31, 2015 and 2014, the company owed $11,350,000 and $4,250,000, respectively, under the line of credit.

The agreement requires the company to maintain a tangible net worth of $20,000,000 and limits capital expenditures to $10,000,000 per year. The capital expenditures covenant excludes Clear Horizons’ capital expenditures. The company was in compliance with all covenants at December 31, 2015 and 2014.

As a part of the revolving credit agreement, the company also has $1,000,000 available for letters of credit. At December 31, 2015, the company had $100,000 in outstanding letters of credit.

22

Bank term notes

$4,666,336

Less: Current portion Long‑term debt, less current portion

2015

2014

$ 2,090,690

$ 2,879,852

736,755

1,438,427

1,255,467

1,355,467

4,082,912

5,673,746

(1,643,431)

(1,592,187)

$ 2,439,481

$ 4,081,559

Revenue bonds totaling $6,000,000 were issued by Dane County, Wisconsin in December 2010.

The proceeds were used to pay bank debt that was incurred to finance the construction costs of a digester system owned by Clear Horizons in Dane County, Wisconsin. The bonds matured in 2015 and were paid at maturity. The bonds were secured by collateral which consisted of substantially all of the assets owned by Clear Horizons. Revenue bonds of $4,012,000 were due at December 31, 2014 and the balance was included as current liabilities ‑ discontinued operations on the 2014 Balance Sheet. See Note 14 for more information.

The company entered into two unsecured bank term note agreements in 2013 for $2,000,000 each. The agreements require monthly payments of $70,955, including interest at the one‑month LIBOR rate plus 2.25% (effectively 2.68% at December 31, 2015) and mature in 2018.

Both notes are guaranteed by the company.

The company entered into a stock redemption note agreement (Note 1) totaling $2,106,686, payable to the beneficiaries of a former stockholder. The amount will be paid in three (3) annual installments, plus interest at prime (with a floor of 5% and a maximum rate of 20%), commencing in October 2014. The note is subordinated to the bank debt.

The company entered into a stock redemption note agreement (Note 2) totaling $1,455,467 payable to a former stockholder. The note will be paid in fifteen (15) annual installments of $100,000 per year, commencing in November 2014, until paid in full, plus interest at prime (with a floor of 5% and a maximum rate of 20%). The note is subordinated to the bank debt.

Principal requirements on long‑term debt for years ending after December 31, 2015 are as follows: 2016

$1,643,431

2017

926,613

NOTE 8 - Related‑Party Transactions The split dollar life insurance receivable of $392,548 and $382,477 at December 31, 2015 and 2014, respectively is receivable from the beneficiaries of a stockholder.

2018

557,402

2019

100,000

The company also has leases with related parties, see Note 7.

2020

100,000

2021 and thereafter

755,466

NOTE 9 - Common Stock

Total

$4,082,912

The company’s capital structure consists of multiple classes of no par value capital stock, as follows:

NOTE 7 - Lease Obligations The company leases various facilities from unrelated third parties and related parties under month‑to‑month and long‑term operating leases. Related‑party lease payments are determined by independent appraisers, are generally approved by the Board of Directors, and approximate market value.

2015

2014

Rent expense: Related parties

$857,642

$690,954

Third parties

$424,991

$502,868

Future minimum lease commitments under noncancelable leases are as follows: 2016

$ 1,130,399

2017

758,955

2018

750,918

2019

551,585

2020 2021 and thereafter Total

568,257 6,722,615 $10,482,729

Pieper and MPS have signed a new lease agreement, with an expected first payment due in April 2016. The future minimum lease commitments above have been adjusted accordingly.

December 31, 2015 shares Issued and Outstanding

December 31, 2014 shares Issued and Outstanding

Class

Voting

Shares Authorized

Class A

Yes

10,000,000

298,728

325,919

Class B

No

5,000,000

287,100

312,683

Class C Series 1

Yes

2,500,000

0

5,294

Class C Series 2

No

2,500,000

235,758

230,464

Class D Series 1

Yes

2,500,000

38,836

38,836

Class D Series 2

No

Total

2,500,000

185,000

201,800

25,000,000

1,045,422

1,114,996

Any shares of Class A common stock not exchanged for shares of Class B common stock will be repurchased from the stockholder by the company at book value. If after such exchange (from Class A to Class B) the stockholder dies, the company will be obligated to redeem the stockholder’s shares of Class B common stock at book value. All stock transactions are recorded at book value on the transaction date. Book value is also referred to as “cost” throughout the accompanying financial statements. As of December 31, 2015, there were no commitments to redeem any shares of Class A and Class B common stock. Class A common stockholders are restricted from selling stock to anyone other than the company. Upon retirement, a retiree has the option of retaining all or a portion of his or her ownership interest in the company but must exchange all shares of Class A common stock held for shares of Class B common stock (nonvoting).

23

Notes to Consolidated Financial Statements continued Class C common stockholders are restricted from selling stock to anyone other than their family members or the company. Class D common stockholders may transfer their ownership rights as defined in the stock rights agreement. Certain corporate actions require the affirmative approval of the holders of Class D stock.

The company’s Board of Directors authorized a two‑for‑one stock split to take effect on March 15, 2016. Each shareholder of record on March 15, 2016, will receive one additional share of common stock for each share held on that date.

NOTE 10 - Defined Contribution Retirement Plans and Deferred Compensation Agreements Pieper, MetroPower, and MPS participate in the PPC Retirement Plan, a defined‑contribution plan providing retirement benefits for non‑union employees who have completed at least 60 days and have attained the age of 21. Employees may contribute the maximum amount allowed under Section 401(k) of the Internal Revenue Code, and the respective company will match 100% of the employee contribution, up to 3% of an employee’s compensation, as defined in the plan documents. The amount of the aggregate contributions by Pieper, MetroPower, and MPS was $914,063 and $710,092 in 2015 and 2014, respectively.

Pieper, MetroPower, and MPS provide deferred compensation plans for certain employees. The sum accumulated by the employee is paid upon retirement, death, disability or completion of ten years of participation in a single lump sum or periodic installments, which may not exceed five years. For employees who complete ten years of service with the company, the deferred compensation may be used to purchase stock. The company records deferred compensation expense ratably over the ten year vesting period. Participants who leave the company prior to their tenth year will generally lose their deferred compensation benefit. The aggregate amount charged to expense for the deferred compensation plans was $766,300 and $319,345 in 2015 and 2014, respectively.

NOTE 11 - Commitments, Contingencies, and Concentrations Surety Many customers, particularly in connection with new construction, require the company to post performance and payment bonds issued by a financial institution known as a surety. If the

24

company fails to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services under a contract, the customer may demand that the surety make payments or provide services under the bond. The company must reimburse the surety for any expenses or outlays it incurs. To date, the company is not aware of material losses to sureties in connection with bonds the sureties have posted on the company’s behalf, and does not expect material losses to be incurred in the foreseeable future. Historically, approximately 20% to 30% of the company’s business has required bonds.

Concentration of Labor Risk Substantially all of Pieper’s and MP System’s field employees are covered by collective bargaining agreements (the expiration dates of such agreements are disclosed in Note 12).

For any agreements that are close to expiration, management believes no additional risk is present based on past negotiations.

Contingencies The company may from time to time be subject to various lawsuits and other claims in the normal course of business. In addition, the company may from time to time receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the company operates. When applicable, the company establishes reserves for specific liabilities in connection with regulatory and legal actions that management deems to be probable and estimable.

NOTE 12 - Multiemployer Pension Plans Pension Plans Pieper and MPS contribute to a number of multiemployer defined benefit pension plans under the terms of collective‑bargaining agreements that cover its union‑represented employees.

These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/ participation requirements, vesting periods and benefit formulas.

The risks of participating in these multiemployer plans are different from single‑employer plans in the following aspects:

A – Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

B – If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

C – If the company chooses to stop participating in some of its multiemployer plans, the company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

As of December 31, 2015, the company has not undertaken to terminate, withdraw, or partially withdraw from any of these plans. Any withdrawal liability would be based on the company’s proportional share of each plan’s unfunded vested benefits.

Pension Fund Electrical Construction Industry Pension Plan

Pension Protection Act Zone Status

The company’s participation in these plans for the annual period ended December 31, 2015, is outlined in the table below. The “EIN / Pension Plan Number” column provides the Employee Identification Number (EIN) and the three‑digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status available in 2015 and 2014 is for the plans’ twelve month periods ended in 2014 and 2013, respectively. The zone status is based on information that the company received from the plan and is certified by the plan’s actuary.

Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP / RP Status Pending / Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration dates of the collective‑bargaining agreements to which the plans are subject.

EIN / Pension Plan Number

2014

2013

FIP / RP Status Pending / Implemented

39‑1291994

Green*

Green*

N/A

Contributions of the company 2015

2014

Surcharge Imposed

$3,870,354

$3,294,540

N/A

Expiration Date of Collective‑Bargaining Agreement 5/31/2018

National Electrical Benefit Fund

53‑0181657

Green

Green

N/A

178,586

444,377

N/A

5/31/2017

IBEW Local No. 150 Pension Plan

36‑6140629

Green*

Green*

N/A

536,854

794,278

N/A

5/31/2018

Sheet Metal Workers National Pension Fund

52‑6112463

Yellow

Yellow

Yes

263,375

245,220

Yes

5/31/2016

Various

Various

Green

N/A

189,639

170,195

N/A

Various

$5,038,808

$4,948,610

Other Pension Plans Total * Zone status was as of May 31, 2015 and 2014.

25

Notes to Consolidated Financial Statements continued The company was listed on one of the plan's Form 5500 as providing more than 5 percent of the total contributions for the following plan years:

Pension Plan

Year Contributions to Plan Exceeded More Than 5 Percent of Total Contributions (as of December 31 of the Plan’s Year End)

Electrical Construction Industry Pension Plan

2014 and 2013

At the date the financial statements were issued, Forms 5500 were not available for the plan years ending in 2015.

Plans Other Than Pension Plans The company made contributions of $13,001,078 and $11,778,616, to multiemployer plans which provide medical benefits to active union and non‑union employees and retirees for the years ended December 31, 2015 and 2014, respectively.

NOTE 13 - New Accounting Pronouncements During May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014‑09, Revenue from Contracts with Customers (Topic 606).

ASU No. 2014‑09 will eliminate the transaction specific and industry specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU No. 2014‑09 will be effective for nonpublic entities for periods beginning after December 15, 2018 and is required to be applied retrospectively including any combination of practical expedients as permitted. The Company has not yet determined the impact ASU No. 2014‑09 will have on the company's financial statements.

During February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842). ASU No. 2016‑02 requires lessees to recognize lease assets and liabilities for the rights and obligations created by those leases and recognize expenses on their income statements in a manner similar to current accounting standards.† For lessors, the guidance modifies the classification criteria and the accounting for sales‑type and direct financing leases. †ASU No. 2016‑02 is effective for annual periods beginning after December 15, 2019. Early adoption is permitted. The company is currently assessing the effect that ASU No. 2016‑02 will have on its results of operations, financial position and cash flows.

26

During November 2015, the (FASB) issued ASU No. 2015‑17, Balance Sheet Classification of Deferred Taxes (Topic 740). ASU No. 2015‑17 requires deferred tax assets and liabilities to be classified as noncurrent in a classified balance sheet. The company has elected to adopt ASU 2015‑17 during 2015. See Note 4.

NOTE 14 - Discontinued Operations ‑ Clear Horizons Due to operational and performance issues, the Board of Directors authorized management to sell both of the digester systems that were owned and operated by Clear Horizons. Both systems were sold in December 2015 for approximately $600,000 plus the potential for a share of future earnings on one of the systems. Of the $600,000 sales price; $100,000 was received at closing and the remaining $500,000 is receivable in 60 equal monthly installments through December 2020 plus interest at 5%. The net book value of the assets sold was $422,872, which resulted in a gain on sale of $177,128, (pretax). The gain was included in “other expenses” in the table below. The sale of the assets qualified as a discontinued operation; which requires the Company to reclassify the financial results of Clear Horizons for 2014 to be comparable to 2015.

The discontinued operations reported results as follows for the years ended December 31: 2015

2014

Net revenues

$ 1,481,058

$ 1,461,601

Cost of revenues

(1,930,085)

(1,513,383)

Operating expenses and impairment

(907,767)

(5,177,266)

Other expenses

(206,053)

(314,179)

(1,562,847)

(5,543,227)

561,000

1,968,000

$(1,001,847)

$(3,575,227)

Loss on operations before income taxes Benefit from income taxes Net Loss

The consolidated statement of operations for 2014 has been restated to reclassify Clear Horizons results as follows: As Previously Reported Consolidated 2014

Clear Horizons Restatement

Restated 2014

Earned revenues

$264,511,703

$ (1,461,601)

$263,050,102

Cost of earned revenues

221,746,998

(1,513,383)

220,233,615

Gross profit

42,764,705

51,782

42,816,487

Branch and corporate expenses

(37,511,990)

1,602,266

(35,909,724)

Loss on impairment of assets

(3,575,000)

3,575,000

—

Total operating expenses

(41,086,990)

5,177,266

(35,909,724)

Operating income

Current Assets Trade receivables, net Inventories

(58,929)

775,055 1,140,762

Other current assets

14,990,195

—

14,990,195

—

382,289

382,289

71,476,046

—

71,476,046

Current assets ‑ discontinued operation Total Current Assets Property And Equipment

3,315

690,556

Less: Accumulated depreciation

Interest expense, net

(777,217)

310,864

(466,353)

Net Property and Equipment

(629,892)

—

(629,892)

Other Assets

(719,868)

314,179

(405,689)

Other assets

957,847

5,543,227

6,501,074

Long term assets ‑ discontinued operation

(346,784)

(1,968,000)

(2,314,784)

611,063

3,575,227

4,186,290

—

(3,575,227)

(3,575,227)

$ 611,063

$ —

$ 611,063

Discontinued operations Loss from discontinued operation, net of tax Net income

Total Property and Equipment

The consolidated balance sheet as of December 31, 2014 has been restated to reclassify the assets and liabilities of Clear Horizons as follows:

$ 54,187,745

(138,538)

687,241

Income from continuing operations

$ (184,822)

833,984

6,906,763

Provision for income taxes

$ 54,372,567 1,279,300

5,229,048

Income from continuing operations, before tax

Restated 2014

Prepaid expenses, deposits, and other current assets

1,677,715

Net other expense

Clear Horizons Restatement

Assets

Other income (expense) Other income, net Charitable contributions

As Previously Reported Consolidated 2014

49,787,486

(4,942,222)

44,845,264

(36,804,735)

3,892,047

(32,912,688)

12,982,751

(1,050,175)

11,932,576

1,579,326

—

1,579,326

—

1,050,175

1,050,175

$ 1,579,326

$ 1,050,175

$ 2,629,501

Trade accounts payable

$ 19,078,773

$ (501,052)

$ 18,577,721

Other accrued expenses

4,630,186

(160,313)

4,469,873

Current portion of long‑term debt

5,604,187

(4,012,000)

1,592,187

16,735,542

—

16,735,542

—

4,673,365

4,673,365

$ 46,048,688

$ —

$46,048,688

Total Other Assets

Liabilities And Stockholders’ Equity Current Liabilities

Other current liabilities Current liabilities ‑ discontinued operation Total Current Liabilities

There was no impact on Long‑Term liabilities or Stockholders’ Equity at December 31, 2014; therefore, those amounts were excluded from the preceding table.

27

Consolidated Balance Sheets As of December 31, 2015 and 2014 Assets Current Assets

Property and Equipment

Other Assets

Cash and cash equivalents Trade receivables, net Unbilled revenue on completed contracts Costs and estimated earnings in excess of billings on uncompleted contracts Costs in excess of billings on minor jobs in progress Inventories Prepaid expenses, deposits, and other current assets Current assets ‑ discontinued operation (Note 14) Total Current Assets Land Buildings and improvements Machinery and equipment Office furniture Trucks, moving equipment and autos Leasehold improvements Total Property and Equipment Less: Accumulated depreciation Net Property and Equipment Investment in artwork, at cost Split dollar life insurance receivable Intangible assets, net Note receivable Other Deferred income taxes Long term assets ‑ discontinued operation (Note 14) Total Other Assets Total Assets

2015 $ 5,545,609 57,850,330 — 7,333,278 7,728,075 761,223 1,113,578 37,426 80,369,519 170,500 164,534 5,084,478 1,152,966 33,283,969 2,871,190 42,727,637 (32,273,758) 10,453,879 584,815 392,548 99,650 500,000 23,883 450,000 — 2,050,896 $ 92,874,294

Restated 2014 $ 1,651,751 54,187,745 16,828 6,328,186 6,993,430 775,055 1,140,762 382,289 71,476,046 170,500 222,411 4,763,915 1,248,503 33,381,084 5,058,851 44,845,264 (32,912,688) 11,932,576 584,815 382,477 112,151 — 23,883 476,000 1,050,175 2,629,501 $ 86,038,123

See accompanying notes to financial statements.

28

Liabilities and Stockholders’ Equity Current Liabilities

Long‑Term Liabilities

Stockholders’ Equity

Less: Treasury stock, 3,609,372 shares in 2015 and 3,530,822 in 2014, at cost Total Stockholders’ Equity

2015 $ 13,337,734 6,683,758 3,626,612 7,101,796 7,722,460 1,643,431 108,034 40,223,825 11,350,000 2,439,481 1,813,632 15,603,113 55,826,938 21,556,610 64,637,383 86,193,993 (49,146,637) 37,047,356

Restated 2014 $ 18,577,721 5,288,569 4,469,873 5,580,163 5,866,810 1,592,187 4,673,365 46,048,688 4,250,000 4,081,559 1,424,353 9,755,912 55,804,600 21,305,490 55,890,733 77,196,223 (46,962,700) 30,233,523

Total Liabilities and Stockholders’ Equity

$92,874,294

$ 86,038,123

Trade accounts payable Accrued payroll, payroll taxes, and employee benefits Other accrued expenses Billings in excess of costs and estimated earnings on uncompleted contracts Billings in excess of costs on minor jobs in progress Current portion of long‑term debt Current liabilities ‑ discontinued operation (Note 14) Total Current Liabilities Line of credit Long‑term debt, less current portion Deferred compensation Total Long Term Liabilities Total Liabilities Common stock, no par value, issued shares: 4,654,794 and 4,645,818 in 2015 and 2014, respectively Retained earnings

29

Consolidated Statements of Operations For the years ended December 31, 2015 and 2014

Other income (expense)

Discontinued operations (note 14)

2015 $282,934,206 229,164,753 53,769,453 (38,154,217) 15,615,236 640,297 (241,200) (617,500) (218,403) 15,396,833 (5,648,336) 9,748,497 (1,001,847) $ 8,746,650

Earned revenues Cost of earned revenues Gross profit Branch and corporate expenses Operating income Other income, net Interest expense, net Charitable contributions Net other expense Income from continuing operations, before tax Provision for income taxes Income from continuing operations Loss from discontinued operation, net of tax Net income

Restated 2014 $263,050,102 220,233,615 42,816,487 (35,909,724) 6,906,763 690,556 (466,353) (629,892) (405,689) 6,501,074 (2,314,784) 4,186,290 (3,575,227) $ 611,063

Consolidated Statements of Shareholders' Equity For the years ended December 31, 2015 and 2014 BALANCES, December 31, 2013 Issuance of stock Repurchase of stock 2014 net income BALANCES, December 31, 2014 Issuance of stock Repurchase of stock 2015 net income BALANCES, December 31, 2015

Common Stock ‑ Shares 4,635,569 10,249 — — 4,645,818 8,976 — — 4,654,794

Common Stock ‑ Amount $ 21,022,125 283,365 — — 21,305,490 251,119 — — $21,556,610

Retained Earnings $ 55,279,670 — — 611,063 55,890,733 — — 8,746,650 $64,637,383

Cost of Common Stock in Treasury $(45,344,450) — (1,618,250) — (46,962,700) — (2,183,937) — $(49,146,637)

Total Stockholders’ Equity $ 30,957,345 283,365 (1,618,250) 611,063 30,233,523 251,120 (2,183,937) 8,746,650 $37,047,356

See accompanying notes to financial statements.

30

Consolidated Statements of Cash Flows For the years ended December 31, 2015 and 2014 Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Supplemental cash flow disclosures Noncash investing and financing activities

Net income Adjustments to reconcile net income to net cash flows from operating activities Depreciation Amortization of intangible assets Deferred income taxes Loss on impairment of assets Gain on disposal of equipment Gain on disposal of discontinued operation Changes in assets and liabilities Trade receivables and unbilled revenue on completed contracts Costs and estimated earnings in excess of billings on uncompleted contracts and minor jobs in progress Inventories Prepaid expenses, deposits, and other current assets Current assets and liabilities ‑ discontinued operation Trade accounts payable Accrued expenses Billings in excess of costs and estimated earnings on uncompleted contracts and minor jobs in progress Deferred compensation Net cash flows from operating activities Purchase of property, plant, and equipment Proceeds from disposal of equipment Proceeds from disposal of discontinued operation Purchase of intangible assets Split dollar life insurance receivable premiums paid Net cash flows from investing activities Payments on term loans and revenue bonds Net (payments) borrowings on revolving line of credit Proceeds from issuance of stock Purchases of common stock for treasury Net cash flows from financing activities Net change in cash and cash equivalents Cash and cash equivalents ‑ beginning of year Cash and cash equivalents ‑ end of year Cash paid for interest Cash paid for income taxes Note receivable in exchange for assets sold

2015 $ 8,746,650

2014 $ 611,063

4,323,317 12,501 26,000 — (67,149) (177,128)

4,931,968 12,506 (1,992,000) 3,575,000 (63,188) —

(3,645,757) (1,739,737) 13,832 27,184 (67,779) (5,239,987) 551,928 3,377,283 389,279 6,530,437 (2,715,771) 424,915 100,000 — (10,071) (2,200,927) (5,602,835) 7,100,000 251,120 (2,183,937) (435,652) 3,893,858 1,651,751 $ 5,545,609 $ 256,354 4,674,522 $ 500,000

(7,133,793) (1,474,460) 113,618 603,250 — 9,242,331 (16,726) 3,122,703 237,539 11,769,811 (2,755,563) 84,667 — (30,000) (8,013) (2,708,909) (2,172,292) (6,250,000) 283,365 (1,618,250) (9,757,177) (696,275) 2,348,026 $ 1,651,751 $ 698,897 1,834,254 $ — 31

Branch Locations, Officers and Directors PPC Partners, Inc. (the “company�) is the parent company of Pieper Electric, Inc. (Pieper), MetroPower, Inc. (MetroPower), and MP Systems, Inc. (MPS).

5464C N. Port Washington Rd PMB 104 Milwaukee, WI 53217-0900

Pieper Electric Pieper Electric, Inc. Milwaukee, Kenosha, Madison, Neenah, Park Falls, WI Schultz Electric Madison, WI

Officers

Directors

James J. Ditter Chief Executive Officer

Jose M. Delgado Former Chairman American Transmission Company

Mary P. Ackerman Secretary Lawrence E. Horning Treasurer

MP Systems Inc

Ideal Mechanical Milwaukee, WI

Carroll Electric Janesville, WI

MetroPower Plumbing Albany, GA

PieperLine

Systems Technologies Merrill, WI

CarolinaPower Greenville, SC

MetroPower Albany, GA Columbus, GA Macon, GA Norcross, GA

Donovan Construction

Investor Information

Annual Shareholder Meeting

Employee Ownership Hotline 888-365-3080

5:30 P.M. Wednesday May 4, 2016 Milwaukee Marriott West W231 N1600 Corporate Court Waukesha, WI 53186

ESS Albany, GA

Richard R. Pieper Sr. Non-Executive Chairman PPC Partners Inc.

James J. Ditter CEO PPC Partners Inc.

William A. Pinto President Hardin Construction Co. (retired)

Louis B. Houston Jr. Managing Director TD Industries

Rosa A. Rojas Rojas Realty Group Founder and Partner

Richard M. Lutz CFO Welded Construction LP

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Metro Power

Independent Auditors Baker Tilly Virchow Krause, LLP Corporate Counsel Michael, Best & Friedrich Milwaukee, WI Transfer Agent & Registrar Continental Stock Transfer &Trust Company New York, NY

Email Address espp@ppcpartnersinc.com Contact Lawrence Horning Lawrence.Horning@pieperpower.com

Milwaukee, WI St. Paul, MN

5464C North Port Washington Rd. PMB 104, Milwaukee, WI 53217 (888) 365-3080 ppcpartnersinc.com

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