What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2021-02-09 · 119 added, 114 removed, 503 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

Revenue $ 148,260 $ 248,327 $ 498,499 $ 905,101

21 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

Net loss $ ( 12,873 ) $ ( 5,495 ) $ ( 20,501 ) $ ( 27,352 )

Other comprehensive loss, net of tax:

Foreign currency translation gain (net of tax expense of $41 and $53 for the three and six months ended December 31, 2020, respectively, and $59 and $37 for the three and six months ended December 31, 2019, respectively) 819 523 1,223 129

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) (net of tax expense (benefit) of ($33) and $20 for the three and nine months ended March 31, 2021, respectively, and ($51) and ($14) for the three and nine months ended March 31, 2020, respectively) 68 ( 1,104 ) 1,291 ( 975 )

Comprehensive loss $ ( 12,805 ) $ ( 6,599 ) $ ( 19,210 ) $ ( 28,327 )

6 unchanged sentences

Cash and cash equivalents $ 73,751 $ 100,036

Accounts receivable, less allowances (December 31, 2020—$853 and June 30, 2020—$905) 151,068 160,671

Accounts receivable, less allowances (March 31, 2021—$856 and June 30, 2020—$905) 158,099 160,671

Costs and estimated earnings in excess of billings on uncompleted contracts 37,964 59,548

41 unchanged sentences

60,000,000 shares authorized;

27,888,217 shares issued as of December 31, 2020 and June 30, 2020;

26,502,960 and 26,141,528 shares outstanding as of December 31, 2020 and June 30, 2020 279 279

27,888,217 shares issued as of March 31, 2021 and June 30, 2020;

26,519,217 and 26,141,528 shares outstanding as of March 31, 2021 and June 30, 2020 279 279

Additional paid-in capital 136,042 138,966

2 unchanged sentences

315,140 337,274

Treasury stock, at cost — 1,385,257 shares as of December 31, 2020, and 1,746,689 shares as of June 30, 2020 ( 21,571 ) ( 29,385 )

Treasury stock, at cost — 1,369,000 shares as of March 31, 2021, and 1,746,689 shares as of June 30, 2020 ( 21,280 ) ( 29,385 )

Total stockholders' equity 293,860 307,889

4 unchanged sentences

(In thousands)

Six Months Ended

2020 December 31,

Nine Months Ended

2021 March 31,

Operating activities:

Net loss $ ( 20,501 ) $ ( 27,352 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

Depreciation and amortization 13,639 14,388

14 unchanged sentences

Accrued expenses 6,907 ( 15,080 )

Net cash provided by operating activities 5,824 38,625

Net cash provided (used) by operating activities ( 13,212 ) 31,487

Investing activities:

6 unchanged sentences

(In thousands)

Six Months Ended

2020 December 31,

Nine Months Ended

2021 March 31,

Financing activities:

3 unchanged sentences

Open market purchase of treasury shares — ( 17,045 )

Issuances of common stock 92 —

Proceeds from issuance of common stock under employee stock purchase plan 230 243

Repurchase of common stock for payment of statutory taxes due on equity-based compensation ( 1,554 ) ( 3,517 )

Repayment of principal portion of long-term liability ( 236 ) —

Net cash used by financing activities ( 12,180 ) ( 16,109 )

Effect of exchange rate changes on cash and cash equivalents 1,220 ( 958 )

Increase (decrease) in cash and cash equivalents ( 6,555 ) 20,780

Decrease in cash and cash equivalents ( 26,285 ) ( 2,212 )

Cash and cash equivalents, beginning of period 100,036 89,715

16 unchanged sentences

Income(Loss) Total

Balances, October 1, 2020 $ 279 $ 132,687 $ 203,365 $ ( 22,342 ) $ ( 7,969 ) $ 306,020

Balances, January 1, 2021 $ 279 $ 133,957 $ 198,774 $ ( 21,571 ) $ ( 7,150 ) $ 304,289

Net loss — — ( 12,873 ) — — ( 12,873 )

Other comprehensive income — — — — 68 68

Exercise of stock options (9,000 shares) — ( 68 ) — 160 — 92

Issuance of deferred shares (900 shares) — ( 16 ) — 16 — —

2 unchanged sentences

Stock-based compensation expense — 2,214 — — — 2,214

Balances, December 31, 2020 $ 279 $ 133,957 $ 198,774 $ ( 21,571 ) $ ( 7,150 ) $ 304,289

Balances, October 1, 2019 $ 279 $ 132,936 $ 245,627 $ ( 13,270 ) $ ( 8,145 ) $ 357,427

Balances, March 31, 2021 $ 279 $ 136,042 $ 185,901 $ ( 21,280 ) $ ( 7,082 ) $ 293,860

Balances, January 1, 2020 $ 279 $ 135,057 $ 217,619 $ ( 22,538 ) $ ( 7,622 ) $ 322,795

Net loss — — ( 5,495 ) — — ( 5,495 )

Other comprehensive income — — — — 523 523

Other comprehensive loss — — — — ( 1,104 ) ( 1,104 )

Issuance of deferred shares (4,650 shares) — ( 77 ) — 77 — —

3 unchanged sentences

Stock-based compensation expense — 2,302 — — — 2,302

Balances, December 31, 2019 $ 279 $ 135,057 $ 217,619 $ ( 22,538 ) $ ( 7,622 ) $ 322,795

Balances, March 31, 2020 $ 279 $ 137,306 $ 212,124 $ ( 29,557 ) $ ( 8,726 ) $ 311,426

Matrix Service Company

10 unchanged sentences

Other comprehensive income — — — — 1,291 1,291

Exercise of stock options (9,000 shares) — ( 68 ) — 160 — 92

Issuance of deferred shares (515,218 shares) — ( 9,083 ) — 9,083 — —

2 unchanged sentences

Stock-based compensation expense — 6,413 — — — 6,413

Balances, December 31, 2020 $ 279 $ 133,957 $ 198,774 $ ( 21,571 ) $ ( 7,150 ) $ 304,289

Balances, March 31, 2021 $ 279 $ 136,042 $ 185,901 $ ( 21,280 ) $ ( 7,082 ) $ 293,860

Balances, July 1, 2019 $ 279 $ 137,712 $ 239,476 $ ( 17,759 ) $ ( 7,751 ) $ 351,957

Net loss — — ( 27,352 ) — — ( 27,352 )

Other comprehensive income — — — — 129 129

Other comprehensive loss — — — — ( 975 ) ( 975 )

Issuance of deferred shares (539,710 shares) — ( 8,563 ) — 8,563 — —

3 unchanged sentences

Stock-based compensation expense — 8,115 — — — 8,115

Balances, December 31, 2019 $ 279 $ 135,057 $ 217,619 $ ( 22,538 ) $ ( 7,622 ) $ 322,795

Balances, March 31, 2020 $ 279 $ 137,306 $ 212,124 $ ( 29,557 ) $ ( 8,726 ) $ 311,426

See accompanying notes.

9 unchanged sentences

The accompanying condensed financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2020, included in the Company’s Annual Report on Form 10-K for the year then ended.

The results of operations for the three and six month periods ended December 31, 2020 may not necessarily be indicative of the results of operations for the full year ending June 30, 2021.

The results of operations for the three and nine month periods ended March 31, 2021 may not necessarily be indicative of the results of operations for the full year ending June 30, 2021.

Significant Accounting Policies

6 unchanged sentences

Under this guidance, a financial asset (or a group of financial assets) are required to be presented at the net amount expected to be collected.

The income statement reflects any increases or decreases of expected credit losses that have taken place during the period.

The statement of income reflects any increases or decreases of expected credit losses that have taken place during the period.

The amendments in this update eliminate the probable initial recognition threshold and, instead, reflect the Company's current estimate of all lifetime expected credit losses on its accounts receivable and contract asset balances.

25 unchanged sentences

Remaining Performance Obligations

The Company had $ 418.0 million of remaining performance obligations yet to be satisfied as of December 31, 2020 .

The Company had $ 444.5 million of remaining performance obligations yet to be satisfied as of March 31, 2021 .

The Company expects to recognize $ 340.8 million of its remaining performance obligations as revenue within the next twelve months.

14 unchanged sentences

The difference between the beginning and ending balances of the Company's CIE and BIE primarily results from the timing of revenue recognized relative to its billings.

The amount of revenue recognized during the six months ended December 31, 2020 that was included in the June 30, 2020 BIE balance was $ 52.8 million.

The amount of revenue recognized during the nine months ended March 31, 2021 that was included in the June 30, 2020 BIE balance was $ 57.9 million.

This revenue consists primarily of work performed during the period on contracts with customers that had advance billings.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Progress billings in accounts receivable at December 31, 2020 and June 30, 2020 included retentions to be collected within one year of $ 35.4 million and $ 37.3 million, respectively.

Contract retentions collectible beyond one year are included in other assets in the Condensed Consolidated Balance Sheet and totaled $ 2.2 million as of December 31, 2020 and $ 1.6 million as of June 30, 2020.

Progress billings in accounts receivable at March 31, 2021 and June 30, 2020 included retentions to be collected within one year of $ 20.7 million and $ 37.3 million, respectively.

Contract retentions collectible beyond one year are included in other assets in the Condensed Consolidated Balance Sheet and totaled $ 3.8 million as of March 31, 2021 and $ 1.6 million as of June 30, 2020.

Disaggregated Revenue

2 unchanged sentences

Geographic Disaggregation:

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

(In thousands)

4 unchanged sentences

Contract Type Disaggregation:

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

(In thousands)

5 unchanged sentences

The profitability of time and materials and other cost reimbursable contracts is typically lower than fixed-price contracts and is usually less volatile than fixed-price contracts since the profit component is factored into the rates charged for labor, equipment and materials, or is expressed in the contract as a percentage of the reimbursable costs incurred.

In the three and six months ended December 31, 2020, our results of operations were materially impacted by changes in estimate of the forecasted costs to complete a large crude oil storage terminal capital project.

The changes in estimate resulted in decreases in operating income of $ 5.8 million and $ 7.7 million during the three and six months ended December 31, 2020, respectively.

The Company has achieved mechanical completion and is demobilizing from the project.

We continue to work through final closeout and outstanding change orders with the client.

Our results of operations were materially impacted by an increase in the forecasted costs to complete a large capital project in the Utility and Power Infrastructure segment, which resulted in a decrease in gross profit of $ 8.9 million in the three and nine months ended March 31, 2021.

The change in estimate was due to lower than previously forecasted productivity caused by excessive rain at the project site, the continuing impact of COVID-19, and rework which led to higher costs and some schedule compression.

The profit on future revenue related to this project will be recognized based on the current project forecast, which is at a reduced gross profit margin.

During the third quarter, the Company achieved mechanical completion of a large crude oil terminal project, demobilized from the project site and completed its assessment of additional recovery of unpriced change orders.

The project's financial impact for the nine months ended March 31, 2021 was a $ 3.8 million reduction to gross profit.

Matrix Service Company

2 unchanged sentences

The Company enters into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business.

Real estate leases accounted for approximately 92 % of all right-of-use assets as of December 31, 2020 .

Real estate leases accounted for approximately 95 % of all right-of-use assets as of March 31, 2021 .

Most real estate and information technology equipment leases generally have fixed payments that follow an agreed upon payment schedule and have remaining lease terms ranging from less than a year to 15 years.

Construction equipment leases generally have "month-to-month" lease terms that automatically renew as long as the equipment remains in use.

During the six months ended December 31, 2020, the Company recognized $ 0.2 million of impairments of a right-of-use asset in connection with the closure of a leased office space.

During the nine months ended March 31, 2021, the Company recognized $ 0.5 million of impairments of right-of-use assets in connection with the closure of leased office space.

The impairments are included in restructuring costs in the condensed consolidated statements of income.

The components of lease expense in the condensed consolidated statements of income are as follows:

Three Months Ended Six Months Ended

December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019

Three Months Ended Nine Months Ended

March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020

Lease expense Location of Expense (in thousands)

5 unchanged sentences

The future undiscounted lease payments, as reconciled to the discounted operating lease liabilities presented in the Company's Condensed Consolidated Balance Sheets, were as follows:

December 31, 2020

March 31, 2021

Maturity Analysis:

11 unchanged sentences

Non-current operating lease liabilities $ 20,651

The following is a summary of the weighted average remaining operating lease term and weighted average discount rate as of December 31, 2020 :

The following is a summary of the weighted average remaining operating lease term and weighted average discount rate as of March 31, 2021 :

Weighted-average remaining lease term (in years) 7.4 years

3 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Six Months Ended

December 31, 2020

Nine Months Ended

March 31, 2021

(in thousands)

10 unchanged sentences

70 27 139 236

Net balance at December 31, 2020 $ 6,977 $ 26,868 $ 26,760 $ 60,605

Net balance at March 31, 2021 $ 6,975 $ 26,873 $ 26,757 $ 60,605

(1) The translation adjustments relate to the periodic translation of Canadian Dollar and South Korean Won denominated goodwill recorded as a part of prior acquisitions in Canada and South Korea, in which the local currency was determined to be the functional currency.

The Company tests its goodwill for impairment annually in May.

While there continues to be uncertainty around the near-term level of spending by some of our customers due to the impacts of the COVID-19 pandemic on our markets and the economy, this uncertainty did not result in any impairment indicators as of December 31, 2020.

We will continue to monitor the latest developments and perform interim tests for goodwill impairment as needed.

The Company tests its goodwill for impairment annually as of May 31st.

While there continues to be uncertainty around the near-term level of spending by some of our customers due to the impacts of the COVID-19 pandemic and the timing of the economic recovery in certain energy markets, the Company concluded, that based on the totality of both positive and negative factors, no impairment indicators existed at March 31, 2021.

However, if customer spending levels do not improve or if the outlook in certain key markets deteriorates, the Company may need to recognize an impairment in conjunction with the annual test in the fourth quarter.

Other Intangible Assets

Information on the carrying value of other intangible assets is as follows:

At December 31, 2020

At March 31, 2021

Useful Life Gross Carrying

5 unchanged sentences

Total amortizing intangible assets $ 19,783 $ ( 12,602 ) $ 7,181

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

At June 30, 2020

6 unchanged sentences

Total amortizing intangible assets $ 24,419 $ ( 15,582 ) $ 8,837

Amortization expense totaled $ 0.5 million and $ 1.1 million during the three and six months ended December 31, 2020 and $ 0.9 million and $ 1.9 million during the three and six months ended December 31, 2019, respectively.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

We estimate that the remaining amortization expense related to December 31, 2020 amortizing intangible assets will be as follows (in thousands):

Amortization expense totaled $ 0.6 million and $ 1.7 million during the three and nine months ended March 31, 2021 and $ 0.8 million and $ 2.7 million during the three and nine months ended March 31, 2020, respectively.

We estimate that the remaining amortization expense related to March 31, 2021 amortizing intangible assets will be as follows (in thousands):

Period ending:

6 unchanged sentences

Thereafter 358

Total estimated remaining amortization expense at December 31, 2020 $ 7,743

Total estimated remaining amortization expense at March 31, 2021 $ 7,181

Note 5 – Debt

On November 2, 2020, the Company entered into the Fifth Amended and Restated Credit Agreement (the "Credit Agreement"), by and among the Company and certain foreign subsidiaries, as Borrowers, various subsidiaries of the Company, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and the other Lenders party thereto, which replaced the Fourth Amended and Restated Credit Agreement (the "Prior Credit Agreement") that was in place at June 30, 2020, which is described in Part II, Item 8.

On November 2, 2020, the Company entered into the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”), by and among the Company and certain foreign subsidiaries, as Borrowers, various subsidiaries of the Company, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and the other Lenders party thereto.

The Credit Agreement replaced the Fourth Amended and Restated Credit Agreement, which is described in Part II, Item 8.

Financial Statements and Supplementary Data, Note 5 - Debt, in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020.

8 unchanged sentences

• The Adjusted EURIBOR Rate, in the case of revolving loans denominated in Euros,

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

in each case, plus the Applicable Margin, which is based on the Company's Leverage Ratio.

5 unchanged sentences

The Leverage Ratio covenant requires that Consolidated Funded Indebtedness, as defined in the Credit Agreement, as of the end of any fiscal quarter, may not exceed 3.0 times Consolidated EBITDA, as defined in the Credit Agreement, or “Covenant EBITDA,” over the previous four quarters.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

• We are required to maintain a Fixed Charge Coverage Ratio (“FCCR”), determined as of the end of each fiscal quarter, greater than or equal to 1.25 to 1.00 .

1 unchanged sentence

◦ If no borrowings are outstanding at quarter end, then the FCCR covenant requires that, as of the end of any fiscal quarter, Covenant EBITDA, after deducting capital expenditures and dividends for the previous four quarters, may not be less than 1.25 times the total of interest expense and cash paid for income taxes over the previous four quarters plus scheduled maturities of certain indebtedness for the next four quarters.

◦ If borrowings are outstanding at quarter end:

▪ for the fiscal quarters ending September 30, 2020 through June 30, 2021, Covenant EBITDA, after deducting capital expenditures, dividends, and share repurchases in excess of $ 7.5 million for the previous four quarters, may not be less than 1.25 times the total of interest expense and cash paid for income taxes over the previous four quarters plus scheduled maturities of certain indebtedness for the next four quarters.

▪ for all fiscal quarters ending on or after September 30, 2021, the FCCR is calculated the same except that all share repurchases for the previous four quarters are deducted from Covenant EBITDA.

◦ If borrowings are outstanding at quarter end, the FCCR is calculated the same except that all share repurchases for the previous four quarters are also deducted from Covenant EBITDA.

• Asset dispositions (other than dispositions in which all of the net cash proceeds therefrom are reinvested into the Company and dispositions of inventory and obsolete or unneeded equipment in the ordinary course of business) are limited to $ 20.0 million per 12-month period.

• Share repurchases are limited to $ 30.0 million per calendar year.

As of December 31, 2020 , the Company is in compliance with all affirmative, negative, and financial covenants under the Credit Agreement.

Availability at December 31, 2020 and June 30, 2020 under the new and prior senior secured revolving credit facilities, respectively, were as follows:

2020 June 30,

(In thousands)

Senior secured revolving credit facility $ 200,000 $ 300,000

Capacity constraint due to the Leverage Ratio 131,690 162,864

Capacity under the credit facility 68,310 137,136

Letters of credit 34,899 34,529

Borrowings outstanding — 9,208

Availability under the senior secured revolving credit facility $ 33,411 $ 93,399

Availability under the new $200.0 million senior secured revolving credit facility at June 30, 2020 would have been the same if the Credit Agreement had been in place on such date due to the capacity constraint.

Note 6 – Income Taxes

Effective Tax Rate

Our effective tax rates for the three and six months ended December 31, 2020 were 20.9 % and 11.0 %, respectively;

compared to 10.5 % and 2.6 % for the three and six months ended December 31, 2019, respectively.

We expect our effective tax rate to be approximately 27.0 % for the remainder of fiscal 2021.

The effective tax rate in fiscal 2021 was negatively impacted by deferred tax asset adjustments of $ 0.2 million and $ 1.2 million during the three and six months ended December 31, 2020, respectively.

On May 4, 2021, the Company entered into the First Amendment to Fifth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), by and among the Company and certain foreign subsidiaries, as Borrowers, various subsidiaries of the Company, as Guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other Lenders party thereto, which amended the Credit Agreement.

The Company entered into the Amended Credit Agreement to obtain temporary relief from the financial covenants due to the continued decline in operating results.

Under the Amended Credit Agreement, the Company will not be required to comply with the Leverage Ratio and FCCR financial covenants for the quarters ending March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021.

The Amended Credit Agreement adds a number of new requirements and restrictions.

During a “Covenant Relief Period” commencing May 4, 2021 and ending on the date on which the Company provides a compliance certificate for the quarter ending March 31, 2022:

• No revolving loans will be made under the credit facility.

• If any new letters of credit are issued during the Covenant Relief Period, the Company will be required to provide cash collateral equal to 50 % of the face value of the letter of credit (or 105 % of the face value of the letter of credit if the aggregate amount of letters of credit outstanding exceeds $ 100 million).

• At all times prior to July 1, 2021, the Company will be required to maintain at least $ 50.0 million of unrestricted cash.

Beginning July 1, 2021, and at all times during the remainder of the Covenant Relief Period, the Company will be required to maintain at least $ 60.0 million of unrestricted cash.

The requirement to maintain unrestricted cash is in addition to any cash which would be required as collateral for any new letters of credit.

• Acquisitions, stock repurchases under the Company’s existing stock buyback program and cash dividends are prohibited.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

• Capital expenditures may not exceed $ 2.0 million in any fiscal quarter.

In addition to these provisions, the Amended Credit Agreement requires the Company to generate Covenant EBITDA of at least:

• $ 2.5 million for the fiscal quarter ending June 30, 2021;

• $ 8.0 million for the six months ending September 30, 2021;

• $ 16.5 million for the nine months ending December 31, 2021.

As of March 31, 2021 , the Company had $ 41.4 million in letters of credit issued under the credit facility and no borrowings.

Note 6 – Income Taxes

Effective Tax Rate

Our effective tax rates for the three and nine months ended March 31, 2021 were 28.2 % and 22.6 %, respectively;

compared to 16.9 % and 5.9 % for the three and nine months ended March 31, 2020, respectively.

Based on the third quarter and full year projected operating results for fiscal 2021, the Company, through provisions in the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), has an income tax benefit from the ability to carryback the fiscal 2021 federal net operating loss five years.

$ 3.2 million of this benefit impacts the effective rate for the third quarter and is a result of the statutory federal income tax rate differential between the current and carryback years.

The effective rate during the quarter was negatively impacted by $ 1.9 million of valuation allowances on certain deferred tax assets.

In prior quarters this fiscal year, the Company recorded $ 1.2 million of other discrete deferred tax asset adjustments, which negatively impacted the effective rate for the nine months ended March 31, 2021.

The Company estimates that it will receive a $ 7.8 million tax refund in connection with the carryback of the projected fiscal 2021 net operating loss, which is included in income taxes receivable in the condensed consolidated balance sheets.

Deferred Payroll Taxes

The Company has deferred $ 11.1 million of U.S.

payroll tax as of December 31, 2020 through provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the "CARES Act").

payroll tax as of March 31, 2021 through provisions of CARES Act.

The deferred payroll taxes are included within other accrued expenses and other liabilities in the consolidated balance sheets.

10 unchanged sentences

There can be no assurance that our insurance and the additional insurance coverage provided by our subcontractors will fully protect us against a valid claim or loss under the contracts with our customers.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

Unpriced Change Orders and Claims

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 13.0 million at December 31, 2020 and $ 14.5 million at June 30, 2020.

Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $ 16.6 million at March 31, 2021 and $ 14.5 million at June 30, 2020.

Generally, collection of amounts related to unpriced change orders and claims is expected within twelve months.

1 unchanged sentence

During the third quarter of fiscal 2020, the Company commenced litigation in an effort to collect accounts receivable from an iron and steel customer following the deterioration of the relationship in the second quarter of fiscal 2020.

The unpaid receivable balance at December 31, 2020 was $ 16.9 million.

The unpaid receivable balance at March 31, 2021 was $ 17.0 million.

Litigation is unpredictable, however, based on the terms of the contract with this customer, the Company is entitled to collect the full amount owed under the contract.

1 unchanged sentence

It is the opinion of management that none of the other known legal actions, including a contract dispute with a customer involving the construction of a crude terminal, will have a material impact on the Company’s financial position, results of operations or liquidity.

Matrix Service Company

Notes to Condensed Consolidated Financial Statements

Note 8 – Earnings per Common Share

3 unchanged sentences

The computation of basic and diluted earnings per share is as follows:

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

(In thousands, except per share data)

4 unchanged sentences

Diluted loss per share $ ( 0.49 ) $ ( 0.21 ) $ ( 0.78 ) $ ( 1.02 )

The following securities are considered antidilutive and have been excluded from the calculation of Diluted EPS:

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

(In thousands)

Stock options 54 26 54 25

Nonvested deferred shares 305 718 436 870

Total antidilutive securities 359 744 490 895

Matrix Service Company

26 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2020 December 31,

2019 December 31,

2020 December 31,

Three Months Ended Nine Months Ended

2021 March 31,

2020 March 31,

2021 March 31,

Gross revenue

51 unchanged sentences

The business improvement plan consists of discretionary cost reductions, workforce reductions, reduction of capital expenditures and the reduction in size or closure of certain offices in order to increase the utilization of the Company's staff and bring the cost structure of the business in line with revenue volumes.

The Company incurred $ 14.0 million of restructuring costs during fiscal 2020 and $4.7 million during the first half of fiscal 2021.

The Company incurred $ 14.0 million of restructuring costs during fiscal 2020 and $6.6 million during the nine months ended March 31, 2021.

The restructuring costs consist primarily of severance costs, facility closure costs, intangible asset impairments and other liabilities as a result of exiting certain operations.

Activities under this plan are essentially complete with remaining costs of $ 1.0 million to $ 1.5 million expected in the third quarter.

The Company will continue to assess whether further reductions in its cost structure are necessary and may incur additional restructuring costs in the near-term.

Matrix Service Company

1 unchanged sentence

Restructuring costs under our business improvement plan are classified as follows:

Three months ended December 31, 2020 Six months ended December 31, 2020 Since Inception of Business Improvement Plan

Three Months Ended Nine Months Ended Since Inception of Business Improvement Plan

March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020

(In thousands)

29 unchanged sentences

Adjustment to liability ( 510 )

Balance as of December 31, 2020 $ 4,101

Balance as of March 31, 2021 $ 2,260

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements